European Plane Deal Worth Billions Threatened

EADS is threatening to pull out of the 20 billion Euro A400M military project if it doesn’t get more money.

Higher costs and delays mean the A400M military planes are taking longer to make and costing more to build.

Airbus and its owner, EADS, say the European governments buying the planes need to either pay more or expect fewer.

But Howard Wheeldon, senior strategist at BGC partners in London, doesn’t think Airbus will actually stop production.

[Howard Wheeldon, Analyst, BGC Partners]:
„They need commitment from the government now. They don’t want to spend unnecessary additional monies on top of the vast amount of development funding they’ve put in, and indeed that the governments have put in. They know this is a loss leader; they will never make a profit from this aircraft.“

Last month Airbus’s A400M enjoyed its maiden flight – two years behind schedule.

Airbus’s chief executive, Tom Enders, is concerned the project is diverting vital resources away from the rest of the business.

He’s threatening to pull engineers off the long-running project to start working on other planes.

But if Airbus does pull out of the deal it faces a hefty bill as it will have to repay at least five billion euros the governments have already handed over.

So far Germany has been the main stumbling block, refusing to pay more or accept less planes.

But EADS is signaling that if a deal is not reached soon it will pull the plug on the project completely.

For the meantime though, the deadlock continues.

(NTDTV)