Airbus Under New Pressure Over A400M

PARIS --- Airbus Group faces renewed pressure from France and other European buyers to meet performance and delivery pledges for its A400M military transport plane but is struggling to meet the deadlines, people familiar with the matter said.

After partly successful efforts to overcome delays on Europe's largest defense project, the A400M has been plunged into uncertainty again, especially due to issues at an Italian subcontractor that have sparked potential compensation claims.

France has written to Airbus pressing it to say whether problems with Italian-built gearboxes and other threats to the A400M's military effectiveness will be resolved this year, but Airbus has declined to give that assurance, the people said.

With urgent needs in sub-Saharan Africa and Iraq, France has raised concerns about three main problems hampering the troop and heavy equipment carrier: gearbox flaws that require the planes to be checked every 20 flight hours, incomplete defensive systems and limits on certain types of parachute operation.

Asked if Airbus had been able to give clarity on resolving them, one person familiar with the matter said, "No, not right now, and especially not in the required timetable, which is by the end of this year".

The French government declined to comment. Airbus said it did not comment on discussions with buyers.

The A400M has been ordered by seven members of the North Atlantic Treaty Organization - Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey - to give Europe an independent airlift capability.

German Defence Minister Ursula von der Leyen said last week that the country would exercise its right to compensation for delays in deliveries of the A400M and may have to buy other transport planes as well.

In 2010, the A400M received a 3.5 billion euro bailout and Airbus later overhauled its management, but problems continue to beset the project launched in 2003 and Airbus is expected to add to the more than 5 billion euros it has already written off.

Last year, a fatal crash that is still being investigated exposed a vulnerability in cockpit alarm systems.

Then early this year a crack was found inside a power gearbox (PGB) made by General Electric's Italian unit Avio Aero, leading to tough new inspections.

"It is currently the main problem and it generates uncertainty about the number of aircraft that can be delivered this year, because it is still unknown how many PGBs Avio can provide," a person close to the project said. (end of excerpt)

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