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Thu, Apr 09, 2009

Airbus Calls UK's Bluff On A400M Fiasco

Says Consortium Could Go It Without Britain

European aerospace consortium EADS -- struggling with the late, overbudget Airbus A400M military transport program -- has responded to cold feet on the part of a development partner with a daring bluff.

As the contractual dealine for the plane's first flight neared, EADS hit up the nations and companies partnering in its development for more capital. Most publicly balked. When that milestone was not met on time, the partners were entitled to demand refunds of investments totalling $7 billion US, or about two-thirds the entire current stock value of EADS.

Now, Reuters reports EADS told Britain Tuesday it is prepared to go forward with the plane, even if the UK pulls out. Britain and Germany are both upset the turboprop airlifter -- which is urgently needed in Afghanistan -- may be four years late.

EADS CEO Louis Gallois said at a defense conference recently that he views the A400M as, "...indispensable to European defense and industry." He also noted while cancellation of Britain's charter order for the jet -- involving 25 of the 180 planes ordered to date -- would be a blow, such a pullout may be politically untenable because of the British jobs which could be lost.

German defense officials have also said a collapse of the project is possible. Major stakeholders are scheduled to meet in July to negotiate a new contract with EADS.

Gallois (above) remains confident. "We will build this plane. There is no show-stopper."

FMI: www.airbusmilitary.com

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