(Miguel Angel Morenatti/AP)
'The A400M puts the whole of Airbus at jeopardy,' Tom Enders said. 'It is my goddam duty as chief executive to prepare contingency plans'
The chief executive of Airbus made an impassioned plea yesterday to European governments, including Britain, to bail out its new military transport aircraft or jeopardise the group’s future.
The €20 billion (£18 billion) A400M project is more than two years behind schedule and is costing the aircraft manufacturer over €100 million a month. Tom Enders, the boss of Airbus, has given the British, French, German and Spanish governments until the end of this month to negotiate a new contract that would allow the company to cover its losses. If not, the project will be shut down.
“As set up today, with uncapped liabilities, the A400M puts the whole of Airbus at jeopardy,” he said. “I will not go down this road. We are still optimistic, but it is my goddam duty as chief executive to prepare contingency plans if these negotiations are not fruitful.”
Defence ministers from the four countries backing the A400M, which will become the main transport aircraft for European armed forces, will meet in London tomorrow to discuss Airbus’s dilemma. With governments seeking cost savings at every turn, the demand from Airbus for up to €5 billion more to finance the A400M is unlikely to be popular.
However, the partner countries have to weigh the possibility that the financial drain on Airbus could threaten its ability to develop new aircraft — particularly the €12 billion A350XWB passenger plane. This could throw the long-term future of Airbus’s 52,000 employees, including 11,000 in the UK, into doubt.
The RAF has ordered 25 A400M aircraft for £2.5 billion and there are rumours in Whitehall that some of these vehicles could be cancelled to save money. The Treasury is, therefore, likely to object to calls to increased funding for Airbus.
The company has already written off €2.4 billion on the A400M project and might end up writing off a further €3.5 billion to get the aircraft into service. Industry insiders have suggested that this would leave a €5 billion shortfall to be made up by the partner governments.
Given the huge number of jobs dependent on Airbus and a pressing need for new military transport planes in all the partner countries, analysts believe that a deal will be struck.
Howard Wheeldon, strategist at BGC Partners, the broker, and a long-time defence analyst, said: “While Airbus management have again threatened to pull out of the A400M project completely if the revised agreement with the governments is not sewn up quickly, we doubt that this is anything more than sabre-rattling aimed at speeding the process up.”
Airbus said yesterday that it had delivered a record 498 aircraft last year, beating Boeing for the seventh consecutive year. However, the number of A380s delivered fell to ten from twelve the previous year as Airbus continued to struggle with production of the superjumbo. It had hoped to deliver 18 A380s this year and Mr Enders called the delays a “big disappointment”.
Despite the record number of deliveries, EADS, the parent company of Airbus, said that its revenues had fallen by 3.6 per cent last year to €41.7 billion. Louis Gallois, its chief executive, blamed this on the weak US dollar and comparatively high euro.
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