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Airbus in fresh talks on A400M plane

Source: Reuters - Thu 4th Feb 2010

Airbus resumed talks with European government buyers on Thursday in a frantic bid to prevent a massive cost overrun from killing off the multinational A400M military transport plane.

The 20 billion-euro (17.4 billion pounds) project is four years late and 11.2 billion euros over budget, threatening up to 10,000 jobs.

EADS unit Airbus is appealing to a group of seven NATO nations for billions of euros in extra financial support to commit to full production of the plane, which made a maiden flight in December.

Junior defence ministers and arms procurement officials met EADS executives at the defence ministry on Thursday.

Britain, France, Germany, Spain, Belgium, Luxembourg and Turkey ordered 180 of the troop planes in 2003 to support increasingly global operations.

The meeting is part of a trio of talks across Europe that could determine the outcome of Europe's largest defence project.

French and German leaders could discuss the issue at a bilateral summit in Paris on Thursday, but a French official said no joint statement had been prepared.

In Istanbul, NATO defence ministers were gathering for two days of talks on Afghanistan and delegates said partners in the A400M project could discuss the funding crisis on the sidelines. 

Talks broke off last week over a 2.4 billion gap in the amount each side is prepared to invest to keep the project afloat, with EADS seeking 4.4 billion euros in extra support and buyers offering 2 billion.

But sources close to the talks said on Wednesday the differences had narrowed.

Spain has proposed that buyer nations pay 2.6 billion euros towards cost overruns, newspaper El Pais said on Thursday, citing a defence ministry letter.

The A400M is designed to put soldiers and heavy equipment in rugged combat zones like Afghanistan, and would-be customers say they want it in service as soon as possible, filling a gap in airlift capabilities between Boeing's jet-powered C-17 Globemasters and the smaller Lockheed Martin C-130 Hercules turboprops.

The A400M project has been held up by engine and other technical problems, sparking testy exchanges between Germany, its biggest projected buyer, and Airbus parent EADS. Other buyers are France, Britain, Belgium, Luxembourg, Spain and Turkey.

Germany called on Wednesday for an urgent solution to the row, but a French official said the parties aimed for a deal by the end of February, weeks later than EADS would like.

EADS is under pressure to close its 2009 accounts which could include billions of euros of writedowns on the A400M.

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