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European Customers Continue To Dither On A400M

by: Matthew Potter
June 23, 2009

Category: Business Line, Companies, Contract Awards, Countries, development program, EADS, England, Events, France, logistics, Military Aviation, production program, Restructuring, Spain | RSS 2.0

The various defense ministers and their staffs of the seven European countries buying the EADS developed A400M transport continued to punt on a decision. They now will wait another month before deciding whether to restructure, end or demand their money back on the troubled program. The orignial decision date was March. That was extended three months to the end of June and now it will be in July when the “terms of the negotiation” are to be defined. Then there will be some period of negotiation with EADS on what to do with the aircraft.

Some countries have been outspoken in support of the very late program while others have discussed ending their participation due to the cost and schedule problems. England who is in the worst position budgetary wise is reevaluating all of their defense spending and looking at areas to cut costs. They have been the most vocal about ending their participation and perhaps getting the upfront money back from EADS.

The company has been stockpiling cash in case there will be a need to give some of the money back already received for the aircraft. A decrease in the number to be purchased will also lead to higher prices for the remaining customers unless some other deal can be reached. It is obviously in the best interest of the company and perhaps the countries involved to complete the program but now these talks have been ongoing for six months or so. At some point some decision will have to be made.

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