Airbus’ A400M Delays Creating Contract Controversies

Airbus’ A400M Delays Creating Contract Controversies (NSI News Source Info) November 4, 2008: Airbus’ A400M is a EUR 20 billion program that aimed to repeat Airbus’ civilian successes in the military market. A series of smart design decisions were made around capacity (35 tons, large enough for survivable armored vehicles), extensive use of modern materials, multi-role capability as a refueling tanker, and a multinational industrial program; all of which leave the aircraft well positioned to take overall market share from Lockheed Martin’s C-130 Hercules.

Airbus’ A400M

If the USA’s C-17 is allowed to go out of production, the A400M would also have a strong position in the strategic transport market, with only Russian IL-76 and AN-124 aircraft as competition. To date, orders have been placed by Germany (60), France (50), Spain (27), Britain (25), Turkey (10), South Africa (8), Belgium (7), Malaysia (4), Chile (3, to finalize), and Luxembourg (1). In the immediate term, however, the firm’s biggest issue is timing. In November 2007, “Airbus A400M Program Delayed 6-12 Months” covered ongoing issues with Airbus’ new military transport aircraft. Without no flying aircraft and a backlog of almost 200 planes, Airbus has already lost potential opportunities in Norway, Canada, and India; even as Lockheed Martin uses that time to solidify the MC/HC-130J variant’s position as a Special Operations aircraft. June 26/08 saw the first A400M aircraft rolled out at the final assembly line in Seville, Spain, but aircraft weight growth is being reported as a critical issue, testbed issues are slowing engine certification, and first flight has now been moved back again again from summer 2008 to early 2009. The key milestone remains the beginning of deliveries, which has escalated into a significant contractual issue at Airbus. In September 2008, EADS CEO Louis Gallois has reportedly sent a letter to the governments of 7 countries who have ordered the A400M, asking them to waive the contract’s built-in penalties for late delivery. Or face a freeze in production from Airbus.