SEVILLE, SPAIN — The chief executive of Airbus warned European governments on Tuesday that they were threatening the long-term viability of the world’s largest aircraft maker by dragging out negotiations over whether to shoulder several billion euros in additional costs for the A400M military transporter.
With national budgets under strain across Europe, officials from the seven countries involved have repeatedly missed past deadlines, prompting executives from Airbus and its parent company, European Aeronautic Defense and Space, to become increasingly dire in their predictions about the consequences of continued delay.
But the Airbus chief, Thomas O. Enders, was unsure whether the pressure campaign would bear results by Jan. 31 — the latest date set for a decision.
“Obviously, until the last minute we will push hard for a positive solution,” Mr. Enders said in an interview Monday. “But at this point I personally see the chances of reaching an agreement by the end of the month at about 50-50.”
The A400M has become a financial albatross for Airbus and EADS: nearly four years behind schedule, several tons overweight and as much as €7 billion, or $10.6 billion, over budget. EADS has already written off €2.4 billion in costs for a project that continues to expend cash at a rate of around €100 million each month.
Airbus and EADS have asked the governments to pay an additional €5 billion — a 25 percent increase over the original €20 billion contract, and to accept significant delivery delays, people with direct knowledge of the negotiations said. Mr. Enders would not discuss the specifics of the talks, saying only that Airbus was insisting on “some explicit and big numbers.”
Analysts said that any agreement that fails to involve significant burden sharing by the government customers would leave EADS vulnerable over the next few years.
“Issues with big aircraft programs can appear any time in the development process, up to and including the start of production,” said Nick Cunningham, an aerospace analyst at Evolution Securities in London. With EADS forecasting roughly three more years before the first A400Ms are delivered, he said, “that’s a long period of risk.”
In the interview, Mr. Enders said there were “huge risks” related to the project “to an otherwise commercially viable company.”
At a news conference Tuesday at the massive A400M final assembly plant in Seville, he was even more direct: “The A400M puts all of Airbus in jeopardy,” Mr. Enders said.
The blunt warning came as Airbus announced that it had delivered a record 498 commercial planes in 2009, topping Boeing for another year. But the crisis in air travel took a heavy toll on new commercial orders, and Mr. Enders said the flagship A380 continues to face significant production challenges.
Revenue at EADS fell to around €41.7 billion for 2009, from €43.3 billion in 2008, due largely to the weakening of the U.S. dollar. Airbus prices its aircraft in dollars in the international market. The company, which reports full financial results for the year on March 9, declined to provide forecasts for 2010.
The seven countries that ordered 180 A400Ms in 2003 — Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey — failed to meet an end-2009 deadline to agree on a new delivery schedule and financing arrangement for the contract, and last month set a new deadline of Jan. 31.
In the interview, Mr. Enders said he asked senior managers last month to draft a roadmap for redeploying engineers to new civil aircraft programs like the A350 jet, which is expected to enter service in 2013, if the A400M falls through.
“We will do every thing we can to make this a success — it’s not that we’ve given up,” he said. “But if we should realize that it’s not going to happen, we have some contingency plans in place for what we do industrially.”
Doug McVitie, managing director of Arran Aerospace, a consultancy in Dinan, France, said he believed that Airbus was “quite serious” about the risks.
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