EADS strikes deal with A400M customers

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EADS and the customers for its A400M military transport have reached a "principle agreement" to amend the contract governing the programme, the manufacturer has revealed.

The contract is to be amended "in the coming weeks", says EADS.

An EADS statement sets out four commitments made by the customer nations within the terms of the principle agreement.

The nations will increase the price to be paid by €2 billion ($2.7 billion). They will waive all liquidated damages related to current delays. They will provide an additional amount of €1.5 billion in "export levy facilities" to ensure their participation in future export sales. Finally, they will accelerate pre-delivery payments in the period of 2010 to 2014.

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©Airbus

A new schedule of pre-delivery payments will be finalised in the amended contract.

Based on the agreement, EADS has increased its A400M loss provision to €1.8 billion, pre-tax, for the full year 2009. As a result, EADS expects pre-tax profit and net income to be negative in 2009. The full-year results are to be disclosed on 9 March.

"The A400M cash flow profile for the coming years is still to be negotiated in the contract amendment," says EADS. "All parties are willing to mitigate negative cash impacts as far as possible. EADS considers that this agreement provides a sound basis for a successful evolution of the A400M programme."

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