Engine Supplier Blamed For Slip In A400M Schedule

Aerospace consortium EADS formally announced Wednesday delays in another Airbus development program, this time for the A400M military transport.

"A400M deliveries are now expected to start six months later than initially planned with a risk of a further slippage of up to a half year," EADS representatives told Reuters.

EADS also confirmed reports by several European media sources over the past several days that EPI, an engine consortium including Rolls Royce and companies from France, Germany and Italy, was behind in work on the TPM400 turboprop engine which will power the A400M.

"The rescheduling of the program is driven by the slow progress in engine development..., schedule overruns in the systems development and a flight test program that differs significantly from that of commercial Airbus aircraft," EADS stated.

Earlier this year, EADS budgeted about $500 million US for costs related to looming delays with the A400M. Analysts say the cost will likely be much higher, however, with this formal announcement.

UBS analyst Colin Crook puts the pricetag at one billion euros, or $1.45 billion US at current exchange rates. Sash Tusa with Goldman Sachs puts the likely pricetag at closer to 900 billion Euros, nearly half of which will likely come from payouts Airbus will have to make to early customers.

"The first six to eight aircraft with the weaker wings and excess structural weight are likely on our calculations to have a payload deficiency of at least 20 percent... These aircraft would therefore be incapable of carrying the contractually specified armored fighting vehicles," Tusa wrote in a research note.

The actual pricetag won't be officially reported until a November 8 earnings disclosure.

The setback also delays the aircraft's maiden flight, which won't occur until July 2008 at the earliest, according to a top-level Airbus official. That represents about a six-month delay over original estimates... and analysts warn it could be longer.

The A400M is intended as Europe's answer to the erstwhile, but aging, C-130 Hercules turboprop transport. Like the American plane, the A400M is also a four-engine, medium-lift aircraft, intended primarily for troop and equipment transport. Planning for the aircraft began in the mid-1980s, but several technical issues and a fair amount of political backbiting prevented the placement of first orders until 2003.

To date, nine countries have signed on for a combined 192 aircraft. The original launch order -- a 180-plane deal from France, Germany, Spain, Britain, Belgium, Luxembourg and Turkey -- was the largest ever single arms purchase in Europe, according to Reuters. South Africa and Malaysia also signed on the dotted line for the aircraft; an order from Chile was later cancelled.

FMI: www.airbusmilitary.com