"EADS has asked the seven partner nations behind the much delayed A400M military transport aircraft for a further €5bn ($7.36bn) to complete the project.
Should the countries agree, it would raise the project costs by about 25 per cent but would provide a lifeline to EADS. Officials are reviewing the request, according to German defence ministry officials. Senior negotiators will discuss the topic further on Friday in Seville, Spain, where the A400M is scheduled to make its much anticipated first flight.
The A400M deal, signed in 2003, was a fixed-price €20bn contract, making EADS’s Airbus subsidiary responsible for all overruns. EADS has already made provisions for €2.4bn of losses on the A400M and is burning through €140m of cash a month on the project.
But it is tied to the aircraft because cancelling would trigger €5.7bn of development funding repayments and damage its credibility. Still it will be a difficult deal to sell to the customer countries that between them have ordered 180 of the mid-sized military transporters. Defence budgets are under pressure due to the financial and economic crisis. An EADS spokesman declined to comment on the request."
Should the countries agree, it would raise the project costs by about 25 per cent but would provide a lifeline to EADS. Officials are reviewing the request, according to German defence ministry officials. Senior negotiators will discuss the topic further on Friday in Seville, Spain, where the A400M is scheduled to make its much anticipated first flight.
The A400M deal, signed in 2003, was a fixed-price €20bn contract, making EADS’s Airbus subsidiary responsible for all overruns. EADS has already made provisions for €2.4bn of losses on the A400M and is burning through €140m of cash a month on the project.
But it is tied to the aircraft because cancelling would trigger €5.7bn of development funding repayments and damage its credibility. Still it will be a difficult deal to sell to the customer countries that between them have ordered 180 of the mid-sized military transporters. Defence budgets are under pressure due to the financial and economic crisis. An EADS spokesman declined to comment on the request."
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