PARIS — Airbus expects to limit future financial damage from the A400M program, helped by an agreement due later this year on a revised schedule for delivery and capabilities for the military airlifter, the company said in a Feb. 7 statement.
“Airbus, European defense agency OCCAR and the customer nations have agreed to work on a number of contractual elements including a revamped delivery plan as well as a road map for the development and completion of military capabilities for the A400M,” the company said.
Those negotiations and the expected agreement could mitigate the financial hit on Airbus.
“With a clear road map in place, the remaining exposure going forward would be more limited,” Airbus said.
The company signed Wednesday a declaration of intent with the launch customers, setting out a “framework” for talks aimed at agreeing on a contract amendment later this year, Airbus said. The clients are Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey.
The declaration of intent sets a new baseline to evaluate the A400M contract, the company said. A further financial provision in 2017 for the program “may be material” and will be disclosed Feb. 15 when the company posts annual results.
“This agreement with our customers is an important step to further mitigate risks remaining on the A400M program,” Aribus CEO Tom Enders said. “We have a good chance to stop or at least reduce the bleeding now and deliver the capabilities our customers need.”
Enders blamed a “flawed contractual setup and insufficient budget” ahead of operational problems. These factors led to heavy losses for prime contractor Airbus, the CEO alleges.
Airbus has so far booked €7.2 billion (U.S. $8.9 billion) of charges on the A400M program, with the manufacturer struggling to deliver the aircraft on time and fitted with the military tactical capabilities required by contract.
Working groups set up by Airbus and OCCAR discussed changes to the delivery schedule and capabilities, reaching an agreement that allowed the declaration of intent to be signed. Those talks arose from ministers of the client nations agreeing March 30, 2017, to open discussions on changing the contract, as requested by Airbus in the previous month.
There would be no comment from either side on the talks aimed at reaching binding terms, the company said.
An Airbus spokesman declined comment.
A high requirement for service has led to availability of 35-40 percent on the A400M flown by the French Air Force, said a French officer, who spoke on condition of anonymity.
Part of the low availability stems from checks needed on the propeller gearbox on the TP400-6 turboprop engine and retrofit of equipment needed to upgrade the A400M to a “tactical” military aircraft.