This story was originally published on April 28. It has been updated to correct a sales figure in the penultimate paragraph.
PARIS — Airbus faces a potentially heavy financial hit due to problems on the engine gearbox of the A400M military transport plane, the European aircraft company said in a an April 28 statement Thursday.
"On the military side, we are now facing a serious challenge for production and customer deliveries of the A400M due to new, unexpected issues on the engine propeller gearbox," Tom Enders, Airbus group chief executive, said in the statement with first-quarter financial results.
"It’s very frustrating but we’ll have to work through this with our engine partners," he said.
Airbus warned there could be a "significant" cost in repairing the gearbox.
"Overall, the cost at completion assessment will need to be adapted accordingly, but at this stage there is not a sufficiently mature view of the technical, commercial and industrial consequences and their potential impact on the financial statements, which could be significant," the company said.
That statement leaves open the possibility of further financial charges on top of the €5 billion (US $5.7 billion) incurred on problems on the four-engine airlifter.
A deep industrial and technical study is underway to find short- and long-term solutions, the company said. Negotiations with clients are continuing on a revised schedule for installing mission capabilities and delivery of the aircraft.
The four turboprop engines on the A400M are built by a European consortium comprising ITP of Spain, MTU of Germany, Rolls-Royce and Safran. Avio Aero, an Italian subsidiary of General Electric, builds the gearbox.
Airbus group reported a drop in operating profit to €501 million from €651 million a year ago, on stable sales of €12.2 billion after €12.1 billion. The financial outlook for the full year was stable, with deliveries of the civil airliners, cash and earnings expected to be toward the end of the year, the company said.
Launch customers of the A400M are Belgium, Britain, France, Germany, Luxemburg, Spain and Turkey, with Malaysia also buying the plane. The negotiations on a new delivery schedule are being held through OCCAR, the European procurement agency.
