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|#1275 2007-11-06 GMT-5 hours|
A400M delivery delays to cost EADS up to €1.4 billion
By Craig Hoyle
EADS will confirm, on 8 November, the full scale of an up to €1.4 billion ($2.0 billion) charge linked to the development and flight-test delays that have affected its delivery schedule for the nine-nation Airbus Military A400M transport.
At best, the penalty for the third quarter of 2007 will be €1.2 billion, it says, with Airbus to carry over €1 billion of this total.
"This estimate is the best that can be established at this point of the programme development, and is consistent with the delays of six months - with a risk of a further slippage of up to a half year - that were announced on 17 October," EADS says.
The final value of the charge will be confirmed during the company's third-quarter results announcement later this week, and will have a major impact on Airbus's financial performance this year. The airframer reported earnings before interest and tax of almost €1.5 billion for the first six months of this year.
Beyond its previous warning of a potential delivery delay of up to one year to the French air force, the A400M launch operator, EADS cautions that its massive financial charge "does not include new potential issues that could arise from flight testing, engine development and military systems".
The announcement comes as more bad news for the A400M programme's seven European launch nations and two export customers. They have between them ordered 192 of the four-engined transport and had expected deliveries to start in November 2009.
A source linked to the Europrop International TP400-D6 engine project has meanwhile confirmed that the consortium failed to meet an EADS-imposed late October deadline to deliver a test engine to the UK's Marshall Aerospace, but claims its transfer is "imminent".
The engine is needed to support risk-reduction flight tests for the A400M propulsion system, which had been scheduled to start in early 2007 using a Lockheed Martin C-130 testbed.