A400M doubts persist

EADS has delivered its final results for 2008, reporting an 11 per cent increase in revenues to €43.3bn and a record order book for the group that stands at €400bn.


EADS has delivered its final results for 2008, reporting an 11 per cent increase in revenues to €43.3bn (£40bn) and a record order book for the group that stands at €400bn.



Group EBIT stands at €2.8bn, supported in part by the effects of foreign currency fluctuations, while research and development spend has increased two per cent to €2,669m. Employee numbers have also risen two per cent to 118,349 compared with the same period in 2007.



Despite a set of results that includes a net income of €1,572m and net cash at a record level of €9.2bn, doubts persist about the A400M programme, which, if cancelled, could result in €5.7bn of lost business.



In May 2003, Airbus Military and OCCAR, the procurement organisation representing seven NATO launch customers including Britain, signed a contract for the delivery of 180 A400M military airlift aircraft.



The 77-month, single-phase development and production programme was expected to see first deliveries in 2009.


EADS has stated that the A400M will not perform its first flight before the end of the month. As such, OCCAR has the contractual right to terminate the entire A400M launch contract as of 1 April 2009 and receive reimbursement for payments already made, which EADS estimated at approximately €5.7bn.



Despite being hailed at the time as most ambitious European military procurement programme ever undertaken, Louis Gallois, chief executive officer at EADS, told delegates at the 2008 annual results conference in Munich that the original launch schedules were unrealistic.



Gallois said that a more realistic target would see deliveries three years after the A400M’s first flight and that a bridging solution could be offered to OCCAR to fulfil any operational requirements.