Airbus shakes up 'critical' A400M army plane project

Thu Jan 29, 2015 11:17am EST
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By Tim Hepher and Jens Hack

PARIS/MUNICH (Reuters) - Airbus Group (AIR.PA: Quote) shook up the management and organization of the A400M military transport program on Thursday after the latest in a long series of delays and technical problems to beset Europe's largest defense project.

Chief Executive Tom Enders acted two days after apologizing in Britain over the problems and promising to draw internal "consequences," in what appears to be a last-ditch effort to stabilize a program facing possible new financial charges.

As part of the shake-up, the head of Military Aircraft activities, Domingo Urena-Raso, offered to step down from his post and will be replaced by fellow Spaniard Fernando Alonso from March 1, the company said.

But production of the aircraft, which has faced quality woes and difficulties in the integration of advanced military features, will be transferred to the defense division's Operations unit, which is in charge of quality management.

In a letter to staff, the overall head of defense and space activities at Europe's largest aerospace group said the A400M was in a "critical situation" and announced the creation of a new monitoring board under his command.

"We apologize to our customers for the delayed deliveries and performance shortfalls. They will be rigorously addressed and we will do our utmost to overcome them," Bernhard Gerwert said, according to the letter seen by Reuters.

Shares in Airbus Group fell around 2 percent on the latest problems with the huge turboprop plane, which could trigger financial provisions with annual results next month.

"Investors have been steeling themselves for A400M charges since at least the third quarter of last year," said Sash Tusa, aerospace analyst at Edison Investment Research. "This announcement suggests the risk is still on the negative side."   Continued...

People are silhouetted past a logo of the Airbus Group during the Airbus annual news conference in Colomiers, near Toulouse January 13, 2015. REUTERS/Regis Duvignau