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Airbus A400M may be cancelled

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posted on Jan, 12 2010 @ 03:23 PM

The chief executive of Airbus has warned that he is prepared to cancel production of the company's A400M military transport plane. Tom Enders told BBC World that he would consider ending the programme if European governments failed to provide more money. "We cannot complete the development of this aircraft without a significant financial contribution," he said.

...The project is now 5bn euros ($7.25bn; £4.5bn) over its initial budget as a result of weight and engine problems...

...The A400M, which was designed to fly troops and equipment, is set to replace ageing military cargo carriers in several European air forces...

...Ditching the A400M would cost EADS some 5.7bn euros in advance payments - more than double the 2.4bn euros it has already set aside to cover losses it expects to incur from the project. Some analysts believe, therefore, that there is too much at stake for Airbus to cancel the project. "Airbus's posturing over the A400M is a tactic to extract more governmental aid to secure funding to ensure that contracts can be met," said Saj Ahmad, an independent aerospace analyst. "If the A400M is terminated, Airbus faces the prospect of a several-billion-euro compensation bill that would obliterate its cash reserve and decimate its stock value."

But others believe that the company could axe the plane to avoid further losses. "There will come a point where it is better for EADS to simply walk away," said Nomura aerospace analyst Jason Adams. Doing so would severely damage Airbus' reputation and boost arch rival Boeing, which has seen the order book for its A400M rival, the C-17, swell.

Airbus chief says he 'may cancel A400M' military plane

I'm afraid this is not my area of expertise — I'm putting this up as I think the buffs in here would be interested in the ramifications of this announcement.

With so much at stake it looks like one to watch.


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