Saturday, April 09, 2011

DTN News - DEFENSE NEWS: A400M Backers Agree Profit-Sharing Deal

DTN News - DEFENSE NEWS: A400M Backers Agree Profit-Sharing Deal
(NSI News Source Info) TORONTO, Canada - April 9, 2011:

The seven countries that are funding the latest Airbus military transport aircraft have agreed on a profit-sharing formula for its export sales.

The contract, which was signed in Seville on Thursday by the countries’ armament directors, marks the final stage in the normalisation of the €31bn ($44bn) A400M project that is already four years late and more than €11bn over budget.

“This is a major milestone, and EADS is particularly proud to have the support of all governments involved in this co-operation programme that represents a strategic capacity for Europe and its defence, and for the new generation of military transport

worldwide,” said Louis Gallois, chief executive of EADS.

“The A400M is a fantastic new aircraft already flying with outstanding and unrivalled capabilities.”

The original €20bn plan for the A400M was agreed by a consortium of Germany, the UK, France, Spain, Belgium, Luxembourg and Turkey to replace the Hercules C-130 and the Transall C-160. The plan had been to provide European countries with 180 heavy-lift aircraft equipped with propeller engines capable of taking off and landing in improvised airfields.

As the finances of European countries began to deteriorate two years ago and the development of the A400M hit cost overruns, EADS and its partners began wrangling over the need for a further subsidies to the project. A settlement was reached in March 2010 in which the consortium agreed to a €2bn increase in the total cost of the project.

This agreement was finalised in November last year but the details of a further €1.5bn “export levy facility” remained unresolved, even as work finally began on the A400M last month.

The terms of the ELF agreed on Thursday in Seville are not disclosed, but they set out in detail the amount that each partner nation will receive from EADS – in return for the extra €1.5bn assistance – for every additional A400M that is sold beyond the original order, which has now been reduced to 174 aircraft, including four that have been ordered by Malaysia.

France will receive its first of 50 A400Ms in 2013, and the UK will receive its first of 22 in September 2014.

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