PARIS — Airbus took a further financial hit on the A400M military airlifter program, booking €98 million (U.S. $115 million) of provisions in results for teh first half the year.
The hit mainly stems from price escalation, the company said in a statement on the first-half results, reported July 26. For the A400M, Airbus saw price increases in labor and equipment above those agreed in the production contract. Those provisions add to previous provisions totaling €7.2 billion — all thank to this reality, stated by Sash Tusa, an analyst with an equity research firm, Agency Partners: “Costs in the aeronautical industry escalate, but Airbus has not been able to reclaim these under the current situation.
In the U.S. there are producer price indices for the aeronautics sector, but the A400M reflects price increases in the euro zone. Airbus carries a heavy burden of financial risk under the present contract, even as the company adds capabilities to the aircraft and continues talks with the core seven client nations for easing the production contract.
"On our largest military program, the A400M, we are making progress operationally, on improving capabilities as well as in negotiations with governments for the necessary contract amendment,” Airbus CEO Tom Enders said in a statement with the results. Airbus expects to an agreement on the contract by the end of the year, the company said.
There were “encouraging prospects for European military cooperation programs in military aircraft and unmanned aerial systems,” while the Airbus Defense and Space division saw strong orders, particularly for space systems, the company said.
Airbus has signed a partnership agreement with Dassault Aviation to cooperate on a Franco-German project for a Future Combat Air System, which is expected to include a new fighter, spy plane and air tanker. Other elements include swarms of drones and cruise missiles.