France says deal ready on Airbus military transport

5th November 2010, Comments 0 comments

France said Friday that the seven countries due to buy the troubled A400M military transport had drafted a new deal to fund the programme and that it would receive its first plane in 2013.

The A400M contract has been a difficult one for the manufacturer Airbus and its parent company EADS, with delivery of the planes already running four years late and a massive 5.2-billion-euro cost overrun.

French Defence Minister Herve Morin said France would buy 50 of the turboprops for 8.4 billion euros (11.8 billion dollars) and that its other partners had agreed a revised contract to cover cost over-runs.

"I have very, very good news for you -- the conclusion of an agreement on the A400M," Morin said, on a visit to EADS subsidiary Airbus' plane-making plant outside the southern French city of Toulouse.

"It only remains for the seven customers to begin national ratification procedures. This November 5 is a great day for the European defence industry," he told reporters covering his factory tour.

In a statement, EADS said the draft deal was the same as had been agreed in principle with the client countries in March, which would see the firm agree to cover 1.8 billion euros in cost overruns itself.

Seven NATO members -- Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey -- have ordered the A400M, a military transport that is designed to replace their elderly C130 Hercules and C160 Transall planes.

The project ran into delays and massive cost overruns as Airbus struggled to perfect the design, and the contract was thought to be under threat as the partners baulked at a 5.2 billion euro funding shortfall.

Earlier this year the entire project appeared to be in jeopardy as client countries, tiring of the delays, threatened to pull out.

But France has remained a champion of the deal, and Morin is confident that the new funding arrangements, if confirmed, will allow construction to go forward and France to receive its first delivery in 2013.

"The A400M flight test programme is making excellent progress and demonstrates the soundness of the product," said Domingo Urena, managing Director of Airbus Military, in a EADS statement.

"We are very proud of the achievements so far and are now moving towards the series production by the end of the year," he added.

Under the draft deal agreed in March, the countries agreed to increase their payment for the planes by two billion euros and provided 1.5 billion more in funding in exchange for a share of any export sales.

In return, Airbus agreed to shoulder the rest of the shortfall.

© 2010 AFP

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