Help
A400M Costing Builders 100M Euros Monthly
By PIERRE TRAN, FARNBOROUGH, UK – EADS and Airbus Military must pay hundreds of million of euros to pay for work on the A400M airlifter as long the seven client countries have not signed a financing deal agreed earlier this year, company executives said.
A400M during a demonstration flight at Farnborough International Airshow on July 19. (Defense News photo by M. Scott Mahaskey)
Airbus Military managing director Domingo Urena told journalists July 19 at the Farnbrough Airshow that he hoped the agreement in principle on cost overruns could be signed “by the end of the year.”
As long the agreement has not been signed, Airbus Military is not being paid for its work on the A400M, an executive familiar with the situation said.
EADS is spending around 100 million euros ($129 million) a month on the A400M, Chief Executive Louis Gallois said earlier this year.
On that basis, the potential cash outflow could be 600 million euros if the two sides fail to sign by the end of the year.
Gallois told a media seminar July 17 ahead of the airshow that financing of current A400M work is part of current talks.
“We are not keen to fund in the interim,” Gallois said. Each party was trying to interpret the heads of agreement in the most favourable way to its side, he said.
Gallois said he hoped the signing could take place in the fall.
Despite the financial crisis, the overall agreement was still in place, and there was no talk of cancellations exceeding the upper limit of 10 aircraft, Gallois said.
The seven launch customers –Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey – agreed in March to inject a further 3.5 billion euros on top of the initial 19 billion euros to cover cost overruns on the A400M program.
The heads of agreement included accelerated pre-delivery payments between 2010 and 2014, with a new schedule to be set. The agreement required detailed negotiations to allow changes to be made to the original contract.
July 23rd, 2010 at 8:27 pm
EADS is once again issued a threat, “Give us the money or we will not be profitable.” And, what real business wants to be in the red? But, they have their easy excuse, “The government didn’t give us our money.”
EADS management knows their political position. They provide the jobs. And, when they cut jobs, the voters get angry and vote in someone who will be their “yes man.” Yes, even in tough times the money can still flow through EADS under threat.
July 24th, 2010 at 3:53 am
Just curiosity question. How much each A400M? Thanks.
July 28th, 2010 at 3:20 pm
A400M costs? Recently reports indicate a recent agreement among Organisation for Joint Armament Cooperation (OCCAR) country members to add 3.5 billion euros to the program. This was agreed under EADS threat to stop production. The report indicates this is a 10% cost overrun for the the original 192 A400M aircraft originally ordered.
So,
10% * X = 3.5B
X = 35BEuros 3.5B
3.5B/192 = 182.3M each
S Africa canceled their 8, and now some of the OCCAR members decided to reduce their order count. The UK reduced to 22 from 25, Germany wants a reduction from 60 to 53 bringing the count to 174 aircraft.
35B + 3.5B (10%) = 38.5BEuros
38.5B/174 = 221.3B Euro per A400M
As of today’s conversion (July 28,2010) that’s USD287M
That’s about it.
July 28th, 2010 at 6:08 pm
What is the cargo capability of this compared to the C-130 and C-17?