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article imageAirbus A400M project flies into dangerous turbulence

By Michael Cosgrove     Aug 10, 2010 in Business
The future of the Airbus A400M military airlifter may be seriously compromised if Germany reduces its order for 60 planes, reports indicate. The possibility of a reduction has been evoked by a political ally of German Chancellor Angela Merkel.
The A400M is the result a multi-national European effort to develop a state-of-the-art four-engined turboprop tactical and strategic airlifter. It has suffered from repeated delays for reasons associated with financial and funding problems, engine performance issues, excess weight and production delays. The A400M eventually made its maiden flight on November 11, 2009, taking off from an airport in Seville, Spain.
Rumors predicting reduced defense spending by European countries – since confirmed - have also led to speculation that the aircraft may suffer yet another setback. Those rumors have just gained in credibility following an announcement by Jürgen Koppelin, defense specialist, Liberal Democrat member, and a close ally of Angela Merkel. Koppelin declared that Germany is seriously considering the possibility of reducing its initial order for A400M’s from 60 to 50.
Germany has ordered more A400M’s than any other country, and if the order was cut from 60 to 50 the plane’s future would no longer be assured, says le Figaro.
Airbus has reacted swiftly to the news, and a spokesman subsequently announced that “The A400M program would no longer have any economic reason to exist if orders fell to below 170 planes.” This is a clear reference to the fact that if Germany reduced its order as planned, the total number of planes ordered would fall to 160– ten less than the minimum required for the program to remain viable.
The minimum number required had already been reduced from its original 2003 level of 180 for which the seven European countries involved in the project signed an initial contract.
An accumulation of factors linked to finance and delays then led to the plane being three years behind schedule with initial cost estimates of €20bn becoming inflated by €5.2bn in overruns. An effort to save the plane was kick-started in March of this year involving spreading cost overruns over all the countries concerned, first delivery in 2013 instead of 2009 as had been agreed initially, and the possibility of reducing the global order total by 10. The measures were confirmed by a signed agreement.
Airbus insists that the agreement is binding but the countries concerned say that it must first be formalized by signing a new order contract.
It is being hoped that a new contract can be signed before the end of the year, but if Germany reduces its order as is being suggested, the project may not make it to the end of Autumn, never mind the end of the year.
Compromise stop-gap ideas will be discussed in September by an informal work group composed of German and French representatives, whose respective governments have rarely seen eye-to-eye on the A400M since the project began.
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