TOM GILL / LONDON
Contract to get final go-ahead as German compensation agreement comes into force
Europe's troubled flagship military transport, the Airbus Military Company (AMC) A400M, was close to launch as Flight International closed for press, following a German promise of compensation if it fails to order the 73 aircraft to which it has committed.
France, Germany and the UK have given final approval to the €18 billion ($15.9 billion), 196-aircraft contract signed in December, and the other five partners were in the process of signing late last week. Belgium, Luxembourg, Portugal, Spain and Turkey are understood to be adding their signatures to a so-called side letter which reiterates Germany's commitment to its full order. "We expect the remaining signatures by the end of the month," says EADS, which adds that the final rubber stamp will come when OCCAR, which represents the national arms procurement agencies, confirms the deal with AMC.
Last month, the German parliament agreed to finance 40 A400Ms at a cost of €5.1 billion under the 2002 budget, but made the extra financing of the other 33 aircraft subject to parliamentary approval of the 2003 budget after national elections in September.
Since AMC is insisting on a fixed-price commercial order, the partners could not afford to sign for 196 aircraft and later find Germany would not take its full share. They have got round this problem by ensuring Germany will pay a penalty should it fail to complete its order.
"My interpretation is that there is a provision for compensation," says a German defence ministry source. The conditions are now "acceptable", says the UK Ministry of Defence.
But the German parliament is unhappy, having been promised by the government that there would be no pre-allocation of next year's budget or compensation packages. There have been calls for defence minister Rudolf Scharping to resign.
Meanwhile, Alberto Fernandez has resigned as chief executive and chairman of AMC, and programme management has been moved from EADS Casa's plant in Seville to Airbus headquarters in Toulouse. Fernandez will stay on as chief executive of EADS Casa and of the EADS Military Transport division.
"The intention for the A400M is to become an Airbus project and programme," says EADS. "Since the centre of business of Airbus is in Toulouse, it is logical programme management moves there."
The moves will not affect the planned A400M final assembly line in Seville or Spain's workshare.
Source: Flight International
