Airbus Threatens To Scrap A400M
Airbus has threatened to scrap the A400M heavy transport project unless its customers, seven European countries, agree, by the end of the month, to help cover the huge cost overruns it has piled up. The big four-engine turboprop flew for the first time Dec. 11 but the controversy over Airbus' demand that customers accept a 25-percent price increase still hasn't been settled. Airbus CEO Tom Enders issued an ultimatum on Tuesday, warning that the company will simply drop tools rather than shoulder the whole burden. "We need to stop this constant drain on resources," Airbus said on Tuesday. "We've asked the governments to take their share of the burden and this needs to be done as soon as possible."
Germany is the largest customer for the transport and is also reported to be the holdout in the negotiations, a charge it denies. The airplane is about three years late and Airbus missed a first flight deadline in 2009. The stakes are high for all concerned. If Airbus drops out, it will have to pay back about $8 billion in seed money provided by the governments and admit failure in its attempt to break into the defense market dominated by U.S. companies. On the other hand, without the airplane, the European countries will remain without the heavy airlift capacity they need for their own requirements and for their NATO commitments.