EADS gets €3.5bn A400M bailout deal
EADS, the builder of Europe's over-budget A400M military transport plane, said it would report a 2009 loss as it clinched a long-awaited bailout with buyer nations costing taxpayers €3.5 billion (Dh17.51bn).
The deal aims to preserve 10,000 jobs by saving the project from collapse but would force the Airbus parent to take €1.8bn of provisions for its share of the cost hemorrhage – pushing it to an operating and net loss for 2009.
Coupled with €2.4bn the group has already written off on the project, the botched development of the new troop carrier plane will have cost Europe's largest aerospace group €4.2bn, as partners wipe the slate clean of technical problems and management and political errors.
"EADS considers that this agreement provides a sound basis for a successful evolution of the A400M programme," the company said.
"EADS will strive to identify opportunities to significantly reduce risks in the A400M programme and to deliver a state-of-the-art product within the new frame of the contract."
Delays and problems in developing the West's largest turboprop engines pushed Europe's largest defense project billions of euros over budget, forcing seven European Nato buyer nations to step in with a mixture of direct aid and guarantees.
The deal – extending the recent wave of bailouts from banks and autos to defense – comes just in time for Franco-German-led EADS to report its 2009 results next Tuesday.
Its auditors have put it under pressure to take a financial hit once and for all on the A400M rather than continue a drip-feed of holding charges.
The A400M was ordered in 2003 to meet a looming shortfall in military and humanitarian airlift planes among seven nations – Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey.
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