European Nations Debate Airbus A400M
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Backers of the delayed Airbus A400M military aircraft gathered in a hilltop village in southern France Friday to decide the fate of Europe's biggest military project, plagued by delays and cost overruns.
Defense ministers from seven European NATO countries were expected to discuss holding six months of further talks aimed at rescuing the project, which is designed to wean Europe off US-manufactured airlift capacity to support global operations.
Barring surprises, Britain is expected to signal on Friday that it will remain part of the EUR20 billion euro (USD$28.5 billion) program despite earlier threats to pull out due to production and budget problems, defense sources said.
But Airbus parent EADS could face a hefty bill to help Britain and France fill gaps in troop transport capacity in Afghanistan while chronic development problems are ironed out.
Britain, France, Germany, Belgium, Luxembourg and Turkey ordered a total of 180 of the propeller-driven A400M planes in 2003. Malaysia and South Africa have ordered 12.
France was due to take delivery of the first plane in 2009 but EADS now says the earliest it can deliver a plane is 2013.
To avoid triggering an automatic cancellation of the project and sacrificing some 4,000 high-tech European staff, buyers have agreed a moratorium that expires at the end of July.
"We hope to convince our partners to take a step forward and go into more precise discussions during the rest of the year," a French official said.
Nations have so far spent EUR5.7 billion on the plane, which EADS would have to repay if the project were canceled.
However it may still have to pay penalties for late delivery as well as help fund stop-gap measures such as leasing Boeing C-17s or Lockheed Martin C-130Js and could see plane orders reduced, depending on the outcome of the talks.
The company, which reports earnings next Tuesday, has so far taken provisions of around EUR2 billion for A400M delays.