Airbus Declares Another Loss on the A400M Program

 - July 31, 2015, 10:21 AM
The third and latest A400M delivered to the UK Royal Air Force was on static display at the recent Royal International Air Tattoo at RAF Fairford. (photo: Chris Pocock)

The Airbus Group has made yet another provision for losses on the A400M airlifter program. After announcing a €551 million charge in the fourth quarter of last year, an additional €290 million net charge was taken in the second quarter of 2015. Airbus said that the accident on 9 May “caused setbacks on qualifying enhanced military capability and the schedule of planned deliveries.”

Negotiations continue on those points with the European governments whose air forces are customers for the A400M. But Airbus CEO Tom Enders revealed that they have been extended to discuss the “escalation formulae” in the contract that is supposed to protect Airbus from the effects of inflation. Enders told financial analysts that the group’s labor and materials cost had not fallen in line with the reduced rate of inflation in the Euro zone. “Industrial efficiency remains a challenge during the ramp-up phase” of A400M production, the company said.

Enders said that Airbus still hoped to deliver “14 to 17 aircraft” this year, compared to the original target of 18, with “the best possible military functionality.” Airbus is now well behind schedule in adding to the A400M such capabilities as paratroop dropping, aerial delivery, full cargo handling system, air-to-air refueling and a defensive aids subsystem. But Enders insisted that the customers remained fully committed to the airlifter, with no further reduction in their order intake being discussed.

Airbus has delivered two more aircraft since the accident, one each to France and the UK. Commenting on the third delivery to the UK, the Chief of Defence Material for the Ministry of Defence Sir Bernard Gray said the A400M program “is at the forefront of modern technology and the Royal Air Force is looking forward to receiving its full order in due course.” He confirmed that the aircraft would entirely replace the RAF’s C-130J Hercules fleet by 2022, despite a recent indication to the contrary.