Thursday, 5 October 2006

The real thing

An 'artist's impression' of the A400M landing on a desert stripAs troubles multiply for the European aerospace giant EADS, the Financial Times has been quoting Airbus Chief Executive Christian Streiff as saying that the revamp of the mid-size A350 XWB project could be at risk.

But more worrying are the implications for our defence capability as Streiff is also saying that the A400M – the military airlifter - could suffer cost overruns or delays. "The timetable is exactly on the edge. It is a tense situation with a number of suppliers and internally. We are exactly on track but without any reserves [of time]," Strieff says.

Britain has ordered 25 of these machines at an expected cost of £2.4 billion, to replace its fleet of 51 US-built C-130 Hercules transports and is suffering a marked shortage of airlift capacity as it waits for Airbus to bring the A400M into production.

Strieff's problem is that the A400M was undertaken by Airbus as a fixed-price contract and he is complaining that, "We have not yet found the right cost base to get to profitability targets," a coded reference to the project over-running its budget.

With the parent group EADS having issued a €4.8bn profits warning following the delays arising from the A380 superjumbo programme, it might not be able to afford to bail out a fixed price military contract.

That there is a potential problem seems to be confirmed by the speed with which Francois Lureau, head of France's DGA procurement agency, came rushing to the defence of the project, declaring that, "the key milestones have been respected and that deliveries are on track for 2009." That, of course, is not the point – the question is whether cost over-runs will force Airbus to pull the plug or slow down production.

In addition to the UK, Germany, France, Spain, Turkey, Belgium and Luxembourg - have the aircraft. South Africa has ordered eight, while Malaysia has ordered four, bringing the order book to just short of 200.

A C-17 on unprepared strip landing trials - the 'real thing'As a straw in the wind, the MoD has now come out openly to tell European politicians to stop meddling in the future of EADS. It is hinting that if they do not the government would reconsider its role as a multibillion-pound customer.

EADS is currently involved in the strategic airtanker contract for the RAF and is also a member of the Eurofighter consortium, but the MoD intervention at this stage could also be a warning over the A400M. With British forces desperately overstretched and in need of additional airlift capacity, the US Boeing corporation is ready and willing to sell the British the tried and tested C-17, which is faster, carries more and is already in service.

It will not be too long before service chiefs get tired of looking at photoshop pics of the A400M (top left) and start demanding the real thing (above right). What price European co-operation then, which consistently fails to deliver the goods?