Spanish minister says agreement in principle reached on future of A400 transport plane

Spain says deal reached on future of Airbus plane

PALMA DE MALLORCA, Balearic Islands — The countries behind the Airbus A400M military transport plane have reached an agreement in principle on the troubled project’s future, the Spanish defense minister said Wednesday.

Carme Chacon announced the deal as she opened a two-day meeting of EU defense ministers on the Spanish Mediterranean island of Mallorca.

She did not say how the countries would resolve their disagreement over funding the late and over-budget project, saying details of the agreement would be provided on Thursday.

“We reached an agreement in principle between the seven nations in the project and EADS,” she said, referring to the parent company of A400M manufacturer Airbus. “The Airbus project will be a success for Europe.”

EADS has been haggling with the seven customers — Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey — that ordered 180 of the turboprop transports regarding who should pay for the costly overruns that have put the program almost four years behind schedule.

The €20 billion ($26.9 billion) project has been delayed and is over budget by about €5.2 billion ($7 billion). The seven nations had earlier agreed to put up €2 billion more, plus another €1.5 billion in loan guarantees.

But EADS said that is not enough to proceed with the project.

Still, EADS itself likely will bear the €1.7 difference in the project’s total cost, said an EU official who was following the talks.

Although EADS has said it would not accept that, the prospect of lucrative foreign sales — including a possible order for 120 planes by the U.S. Air Force — may induce it to accept the deal and go ahead with deliveries, said the official who could not be identified because he was not authorized to speak to the media.

In Berlin, German Defense Minister Karl-Theodor zu Guttenberg also refused to provide any details on the negotiations on Wednesday. “I think those are constructive negotiations and we will reach a solution,” he told reporters in Berlin.

In Munich, EADS spokesman Alexander Reinhardt declined to comment on Chacon’s statement, but he did say in an interview, “All parties are working to find an agreement that is acceptable to all sides.”

European nations have long been hampered by the shortfall in strategic military airlift capabilities. In the 1990s, they struggled to deploy forces to nearby troublespots in Bosnia and Kosovo without using U.S. Air Force transports such as the Boeing C-17 Globemaster III.

Airbus claims the A400M, which uses the largest turboprop engines ever fitted to a Western aircraft, will be able to carry twice the load of another competitor, the Lockheed Hercules, and that its fuel-efficient power plants will make it cheaper to operate than the jet-powered C-17.

Efforts to forge a deal on the troubled A400M project have overshadowed other items on the agenda of the defense ministers’ meeting.

The 27 EU ministers are tackling various issues including the EU’s military role in humanitarian missions such as Haiti earthquake relief; current EU operations in Bosnia, where the bloc has about 2,000 troops; the maritime anti-piracy mission off the Somali coast; and a plan to form and train a new Somali government army, Chacon said.

Defense ministers from neighboring North African states — Algeria, Morocco, Tunisia and Mauritania — also will take part, she told journalists.

Associated Press writers Daniel Woolls in Madrid, Juergen Baetz in Berlin and Greg Keller in Paris contributed to this report.