UPDATE 1-EADS says engines for A400M still an issue

[tigershark]

UPDATE 1-EADS says engines for A400M still an issue
Tue Apr 22, 2008 8:13am EDT

(Rewrites with Airbus Military CEO comment, adds background)

SEVILLE, Spain, April 22 (Reuters) - Airbus's flagship military aircraft the A400M is still dogged by issues with its engines, and costs related to the programme have risen by 1.4 billion euros ($2.22 billion), the head of its military unit said on Tuesday.

"We will have to address this issue in the next few months," Carlos Suarez, head of Airbus Military (EAD.PA: Quote, Profile, Research).

"The engines are the most sensitive part of the programme. This issue will remain the main focus point during the first test flight and the production process."

Peter Scoffham, head of defence capability marketing of Airbus Military, told reporters he still expected the A400M's first test flight by the summer.

Between 200 and 400 units could be sold during the next 15 to 20 years, he said.

The A400M, which is being assembled in Seville, is running six to 12 months late mainly due to problems in supplying the large turbo-prop engines contracted out to a European consortium including Rolls Royce Plc (RR.L: Quote, Profile, Research) and Safran (SAF.PA: Quote, Profile, Research).

A further delay to Europe's biggest current military project would be another blow for Airbus's parent EADS, which has been hit by delays to its A380 superjumbo passenger plane and problems in developing its new mid-sized A350XWB jet.

The A400M project involves a 20 billion-euro, fixed-priced contract to deliver 180 transport planes to seven European nations as well as 12 for export customers South Africa and Malaysia. EADS had planned first delivery to France in 2009.

EADS has said any further delay in the A400M would lead to additional development costs for the project, which run at 1 to 1.5 billion euros a year.

A German defence ministry spokesman said in January that Germany was considering whether to impose contractual fines for the A400M delays already announced by EADS.

EADS has cut costs in the wake of damaging delays to its aircraft production timetable but now faces strikes at all French Airbus factories.

Unions want to stage a strike on Thursday from 0600 GMT until 1000 GMT at the French sites to protest against Airbus's differing treatment of French and German factories, CFTC union representative Marina Lensky said on Tuesday.

Airbus last month ended talks on the sale of three German sites to a consortium but talks continue on other sales, including a plan to find a partner for the Meaulte/St Nazaire-Ville production facility in France. (Reporting by Matthias Blamont; Additional reporting by Nicolas Fichot in Toulouse; Writing by Gilbert Kreijger; Editing by Quentin Bryar)

Source
http://www.reuters.com/article/marketsNews/idUSL2264325920080422