Germany will not yield to A400M funding demands

Germany will not yield to demands from planemaker Airbus to increase its funding to the delayed A400M transport aircraft, a Defence Ministry official was quoted as saying by a newspaper on Tuesday.

An advance copy of yesterday's edition of business daily Handelsblatt said the official, whom it did not name, said Germany would not contribute more than an additional €650 million (Dh3.44 billion) set out in its contract to cover inflation and surcharges.

A source close to the planemaker said on Tuesday its chief executive was growing impatient over the failure so far to agree on a budget deal for the 20 billion euro military project, which is dogged by delays and soaring costs.

Airbus parent EADS has asked countries buying the transporter to come up with funds for increased production costs. But key buyer Germany has until now ruled out making concessions on volume or price.

German newspapers have reported that Airbus has drawn up contingency plans to scrap Europe's largest defence project in a sign of its exasperation following months of inconclusive talks with seven European Nato buyers.

Scrapping the deal could trigger repayments of more than €5bn in government advances to nations that first commissioned the troop and heavy equipment carrier – Germany, France, Britain, Spain, Belgium, Luxembourg and Turkey.

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