'New Approach' Means More Of Same Delays

Airbus Military and EADS announced Monday a "new approach" for the oft-delayed A400M military program... telling its partner nations they must join together to "find a way forward" with the trouble-plagued aircraft.

In a release issued Monday, both entities stated they "want to discuss the program schedule along with changes to other areas of the contract including in particular certain technical characteristics of this first-class military aircraft."

What that rhetoric boils down to, reports Bloomberg, is a three-year delay in first deliveries for the airlifter intended to compete with the C-130 Hercules.

As ANN reported, planning for the A400M 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... but they've faced a number of technical delays and even more excuses from Airbus since then.

Airbus owner EADS announced in September the A400M's first flight had been delayed until sometime in 2009, and attributed the delay to trouble with the engine program. Safran pointedly responded at the time that Airbus already had eight TP400s in their possession, enough to power the first two planes.

Since then, the first TP400 has flown on a C-130 testbed, and the A400M test plane is still on track to fly sometime this year... but the first production planes will not be delivered until sometime in 2012, at the very earliest.

Airbus Military stated "adequate maturity" must be reached, "based on flight test results," before the company will commit further to a delivery timetable.

"Airbus Military and EADS will only be able to reliably determine all financial implications once a committed industrial plan, including the availability of systems, is fully stabilized and once OCCAR's position on the proposal is known."

Nick Cunningham, an analyst with Evolution Securities, said the latest delay could result in as much as $6 billion in new losses for EADS. He changed his recommendation on EADS stock to "sell" on the news.

FMI: www.airbusmilitary.com