February 23, 2017 / 3:49 PM / 2 years ago

Exclusive: Airbus calls for European ministerial meeting on A400M

(Reuters) - Airbus (AIR.PA) has called for a European ministerial meeting to address the latest problems engulfing the A400M military plane, saying its own viability is at stake as it seeks government help to contain fresh losses on Europe’s largest defense project.

A waiter walks past an Airbus A400M military transport plane is parked at the Airbus assembly plant during an event in the Andalusian capital of Seville, southern Spain, December 1, 2016. REUTERS/Marcelo del Pozo

The move comes a day after Airbus took a fresh writedown of 1.2 billion euros against A400M losses and urged seven NATO buyer nations to limit its exposure to heavy fines and payment delays caused by new technical snags and delays.

In a letter to government buyers, the company spoke of “significant risks ahead” on the project, originally valued at 20 billion euros and now costing well over 30 billion euros, according to two people familiar with the letter’s contents.

“We are committed to the A400M program. However we are responsible to sustain the viability of Airbus,” said the letter signed by Airbus Chairman Denis Ranque and Chief Executive Tom Enders and sent to the capitals of Belgium, France, Germany, Luxembourg, Spain and Turkey and the UK.

Noting “huge losses” on the project, Airbus called for a meeting of ministers of those nations to take stock of the situation and agree on next steps in the best interests of the program, government customers and Europe’s defense industry.

It also called for talks with Europrop International (EPI), the consortium responsible for providing the troop carrier’s turboprop engines, which have been involved in some delays.

EPI is owned by France’s Safran (SAF.PA), Britain’s Rolls-Royce (RR.L), Germany’s MTU Aero Engines (MTXGn.DE) and Industria de Turbo Propulsores (ITP) of Spain.

An Airbus spokeswoman declined comment on Thursday on details of the company’s contacts with governments, but said there would be three elements to any discussions: the nations, the OCCAR pan-European procurement agency and the engine makers.

Engine consortium EPI could not immediately be reached for comment.

A spokesman for OCCAR had said on Wednesday the agency was in regular and ongoing dialogue with Airbus, but declined comment on the company’s request for new measures.

Airbus received a 3.5 billion euro bailout from the seven core purchasing nations in 2010, but has suggested it did not go far enough in limiting the company’s financial exposure.

Defence officials from the seven nations were expected to confer by telephone on Airbus requests as early as Thursday.

Germany, the largest A400M buyer, has so far given a cool response, saying it is important that Airbus should resolve outstanding problems on the military program.

Reporting by Reuters bureaus, Writing by Tim Hepher, Editing by Richard Balmforth

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