Airbus raises stakes in A400M row

Airbus set itself on a possible collision course with the German government yesterday by signalling it was ready to walk away from a delayed €20 billion (Dh106bn) military plane project in a row over costs.

A source close to the planemaker said its chief executive was growing impatient over the impact on its jetliner business of the failure so far to agree a budget deal for the A400M transporter, which is dogged by delays and soaring costs.

"Tom Enders [Airbus CEO] is not willing to put the civil aviation business at Airbus at stake for the A400M," a source close to the company said.

The A400M's inaugural first flight last month was two years behind schedule following delays in engine software development and other snags (Eads).

Eads has asked the buyers to come up with funds for increased production costs, but Germany has until now ruled out making concessions either on volume or price.

German news reports have said Enders is drawing up contingency plans to exit Europe's largest defence project, raising the stakes in a funding struggle mainly with Germany. Eads unit Airbus has been in tense negotiations with European Nato buyers for months over the future of the A400M, which the company says can only be built with either more help from governments or by effectively splitting the order into tranches.

Financial Times Deutschland cited company sources as saying Enders was very sceptical that an agreement with the group of seven original European Nato buyers over additional payments could be reached by end-January.

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