Governments step in to save A400M

Confirmation just out that customer governments are going to step in to save the Airbus Military A400M programme is hardly shock news, even though the two sides have been engaging in much brinksmanship over the past few months. As Flight International noted in our Comment piece a few weeks ago, the project is simply too big to fail.

I'll be travelling to Paris on Tuesday for the EADS full-year results for 2009. Expect this agreement and its fall out to be a huge talking point.

Here is the press release just issued:

Leiden, 5 March 2010 - The Customer Nations and EADS have come to a principle agreement regarding the A400M military transport aircraft with the intention to amend the original contract accordingly in the coming weeks. In this principle agreement, the Customer Nations agree to

• Increase the price of the contract by €2 billion;
• Waive all liquidated damages related to current delays;
• Provide an additional amount of €1.5 billion in exchange for a participation in future export sales (Export Levy Facilities);
• Accelerate pre-delivery payments in the period of 2010 to 2014, a new schedule of which will be finalised in the amended contract;

 Based on this agreement, an estimate at completion of updated revenues and costs including an assessment of risks, reviewed by the EADS Board of Directors, leads to an increase of the A400M loss provision of € 1.8 billion pre tax for the full year 2009. The update of the provision is based on a management assessment taking into consideration the principle agreement between EADS and the seven Nations.