German defense minister pressures EADS on A400M ahead of meeting

Germany pressures EADS on A400M

BERLIN — German Defense Minister Karl-Theodor zu Guttenberg increased the pressure on aerospace firm EADS going into crucial negotiations Thursday in Berlin about the company’s demand for more government financial help with its troubled A400M military transport plane.

“Be assured: We want the A400M, but not at any price,” Guttenberg told weekly Bayernkurier.

Guttenberg’s comments came ahead of a meeting of high level representatives from EADS and the A400M customer nations — Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey — at the German Defense Ministry.

A ministry spokesman said the talks lasted roughly three hours before they ended. The representatives were to continue the discussions Friday, he said.

The spokesman did not give his name, in keeping with German government policy.

Guttenberg pointed out that Germany had already accepted delivery delays, but that the country’s willingness to compromise on the price on the four-engine turboprop “was limited.”

CEO Louis Gallois of EADS and Thomas Enders, chief of its Airbus plane-making subsidiary, were expected to lead the company’s delegation at the meeting.

The defense officials from the seven countries and the industry are trying to reach a compromise on Airbus’ claim that it can’t afford to keep the project going under the original, fixed-price contract. Airbus has said it may have to cancel the program if the financial aspect does not change.

The aircraft is now four years behind schedule and more than euro5 billion ($7.3 billion) over budget.

Airbus has asked for a decision by the end of January. Defense ministers will meet in Istanbul, Turkey, on Feb. 4 and 5.

EADS is urging the participating nations to increase their funding for the A400M. But Guttenberg insisted that the company should shoulder the lion’s share of any cost increase, as was agreed in the initial contract in 2003.

His French counterpart, Herve Morin, also said on Wednesday in Paris that “EADS should pay a very significant share of the extra costs.” Morin added that Germany has the strongest reservations about increasing its share of the bill.

Meanwhile, a compromise solution was apparently discussed under which the price tag would remain unchanged but the customer nations would request fewer planes than the 180 ordered so far.

German union representatives welcomed this prospective as the best solution to secure thousands of possible jobs.

“The A400M’s complexity and cost has been underestimated and the contract had an unrealistic schedule from the beginning on,” Bernhard Stiedl of the IG Metall union said in a statement.

A confidential audit, whose findings leaked on Wednesday, blamed poor management by EADS as one of the main reasons for the exploding costs and delays, thereby increasing the pressure on the manufacturer.

The A400M had its maiden flight last month in Spain. The four-engine turboprop is seen as inhabiting an important niche market between the Lockheed Martin C-130J Hercules, which carries only half the payload, and Boeing’s C-17 Globemaster III, which is larger, costlier, and less tactically versatile.