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Airbus chief hails A400M contract review as 'breakthrough'

Airbus foresees a charge worth €1.3 billion ($1.6 billion) associated with the A400M programme for 2018, after the manufacturer reached a tentative agreement with its launch customers to revise their contracts for the tactical transport.

Speaking at a results briefing in Toulouse on 15 February, Airbus chief executive Tom Enders hailed the declaration of intent with Belgium, France, Germany, Luxembourg, Spain, Turkey and the UK via Europe's OCCAR defence procurement agency – which was disclosed earlier this month – as a “breakthrough agreement”.

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Airbus Defence & Space

He says discussions over the past few years covered “seven to eight points” which Airbus wanted to renegotiate, and that the preliminary agreement represents a “win-win” result for participants. “We have much better predictability on our expenditure going forward and on deliveries for customers,” he says, adding: “We are ring-fencing that programme.”

The deal represents a “global re-baselining” of the contract and includes revised aircraft delivery and retrofit schedules and an “updated technical capability roadmap”, Airbus says. The manufacturer notes that the agreement is an “important step towards… mitigating the commercial exposure while satisfying customer needs with regard to capabilities and availability of the aircraft”.

There will be “a lot of retrofit work in coming years to bring the aircraft to standard”, Enders says.

For 2018, chief financial officer Harald Wilhelm expects the programme will have a €1 billion impact on the group’s cash-flow, but he foresees that the A400M will start generating profit for Airbus from 2020 or 2021.

Last year, the manufacturer delivered 19 A400Ms – two more than in 2016. But Airbus says the production rate was “adjusted to recalibrate inventory levels while the military capability roadmap was re-baselined”.

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