1909

Airbus takes £1.8bn hit on new RAF Atlas cargo plane as NATO buyers hold back payments after delays

Plane maker Airbus has had to write off £1.8billion as it wrangles with Nato countries over the cost of a military cargo plane.

Governments have held back payments for the A400M, which the RAF has dubbed ‘Atlas’, and fined the company after delays caused by mounting technical difficulties.

Yesterday, chief executive Tom Enders said it had struck an ‘unrealistic’ deal over the planes in 2003 and appealed for governments to ease financial pressure.

‘We cannot go on like this,’ he said. ‘This is unacceptable and puts a huge burden on Airbus and we need to do something about it.’

The A400M was designed as a replacement for the Hercules plane which has been used to transport military personnel and equipment.

A number are in action, with some in Africa, and one already flying for the RAF.

But the production of the aircraft has been beset with difficulties and they are already thought to have cost Airbus around £8.4billion.

Enders’ pleas come six years after the company won a £2.9billion bailout for the planes after he threatened to cancel the deal.

The craft are being made for Germany, France, Britain, Spain, Belgium, Luxembourg and Turkey.

In 2015 one crashed on a test flight in Seville, Spain, killing four crew. In 2016, Germany grounded two of its three A400Ms due to gearbox issues.

Despite the problems, Airbus yesterday reported a 3 per cent boost in revenues from £53.9billion to £56.5billion, with commercial aircraft sales rising 7 per cent but defence and space revenue falling 9 per cent.

The company has plants in Filton, near Bristol, and Broughton, North Wales, where it makes aircraft parts and develops technology.

Wing sets are transported by road, sea and plane to be put on craft in France. Enders said: ‘We have delivered on the commitments that we gave a year ago and achieved our guidance and objectives, with one exception, the A400M, where we had to take another significant charge.

‘De-risking the programme and strengthening programme execution are our top priorities for this aircraft in 2017.’

Defence industry analyst Howard Wheeldon said: ‘There can be no denial that development, test and production issues have seriously delayed A400M delivery to partner air forces by several years.

‘Even so, when all these issues have been finally sorted and implementation is complete, the A400M will undoubtedly provide the European government air forces with the capability that they both want and urgently need.

‘To a greater extent, the A400M aircraft is already doing just that in service but there is no denial hangover issues remain.’

He added: ‘It is looking more that if the partner governments fail to provide a stronger level of financial support that Airbus could well walk away from being an active participant in providing defence capability.’