Airbus has made a plea to the six European nations that launched the A400M program for relief from the penalties they are enforcing for late deliveries of the airlifter and shortfalls of its promised performance. The company has taken another €1.2 billion ($1.3 billion) financial charge on the program, making a total of €2.2 billion ($2.3 billion) for 2016. “We must stop the bleeding and de-risk the program,” said chief executive officer Tom Enders during the company’s annual results media briefing today.
“We want to discuss seven or eight issues with our customers,” Enders continued. “We are asking for relief from inappropriately heavy penalties…the risk-sharing is [currently] lopsided,” he added. The CEO took a swipe at OCCAR, the pan-European agency that is procuring the A400M for the nations. “There’s lots of red tape and bureaucracy; we can’t go on like that,” he said. Enders claimed that the customer nations appreciated the step-change in airlifter capability provided by the A400M. “If we deal reasonably with each other, I have no reason to be pessimistic about the outcome,” he added.
In a statement accompanying the results, Airbus said that “further challenges were encountered to meet military capability enhancements” during the second half of 2016. Enders referred to aerial delivery and the defensive aids sub-system (DASS) as problem areas, but it was not clear whether those “challenges” include any that are additional to those already admitted.
The additional charge takes into account the liquidated damages and delay penalties that the nations are enforcing, plus a re-assessment by management of the A400M program’s cost. Enders acknolwedged that “our cost-cutting targets were too ambitious.”
Airbus delivered 17 A400Ms last year, against a target of 20. Two more have been delivered so far this year. But Enders admitted that the propeller gearbox problem that surfaced early last year had heavily impacted the operational availability of the airlifter. An interim fix has been fitted to half of the delivered fleet, but it requires a decrease in the interval between inspections.
Reviewing the program’s troubled history, Enders said, “We and our customers under-estimated the complexity of this aircraft.” Despite the concessions made by the launch nations during the crisis negotiations in 2009-10, “we’re still stuck with the original contract, where we made the incredible blunder of taking responsibility for the engine,” Enders said. In most other defense programs, he claimed, the customers negotiated separately for powerplants and supplied them to the airframer as government-furnished equipment.