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CASTELLET, France - The seven European client countries of the A400M military transport plane overcame internal differences to agree July 24 to continue the troubled program, with a common intent to renegotiate the original 20 billion euro ($28.4 billion) fixed-price contract with prime contractor EADS.
The first flight of the A400M is planned for December in Seville, Spain. (EADS)
"I want to thank all my colleagues for their political commitment and for the work done in the last few months, which allowed us to consolidate a major program for European industry and for all our countries," French Defense Minister Hervé Morin said. "We had differences, we had different problems, we have different constraints, notably operational constraints - operational constraints for each country which imposed a different resolution to the program - and we were able to reconcile these differences to allow today to sign an agreement which engages us in a global renegotiation of the contract."
Morin hosted the meeting of ministers from Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey.London sent procurement minister Quentin Davies to the meeting.
Under the agreement, renegotiations with EADS will begin after the August holiday. A meeting will take place Oct. 15 in Germany to present the new terms, which will cover the financial aspects, a new delivery schedule and the conditions.
If the new terms are formally agreed upon at the October meeting, lawyers will draft the documents for signing in December, around the same time as the planned first flight of the A400M in Seville, Spain.
"EADS welcomes the ministers' statement that the A400M is still their preferred choice for future air transport and their agreement to enter into detailed negotiations with Airbus Militar Sociedad Limitada (AMSL) up to the end of the year," the company said in a statement. "On their side, EADS and Airbus are fully committed to finding an agreement that is technically and contractually acceptable to both sides."
Britain came close to pulling out of the program.
Davies said on the sidelines of the meeting here that "a few weeks ago, it didn't look as if we'd be part of the program."
But Britain is now "enthusiastic to save this project if we can," he said. "Britain entered the talks in good faith."
At stake is the cost to EADS of continuing the program. The European aerospace company was seeking extra development funding and a waiver of penalty payments. That is the heart of the renegotiation, Davies said.
A joint declaration after an Anglo-French summit earlier this month said industry - EADS and its Airbus Military subsidiary - would have to face the full consequences of its delays.
The A400M program consumes an average of 100 million euros a month and faces a further three years before delivery of the first aircraft to the French Air Force.
"That will be the outcome of the negotiations," a French official said.
Morin said he had approved the extension of 10 C-160 Transall transport planes for the French Air Force, and the service also will lease aircraft to fill the interim capability gap. The planes would be CASA models or C-130Js, but he had not decided yet.
"All options are open," the French official said.
The ministers met for talks at a luxury private hotel by a hilltop village here, near the southern harbor town of Marseille.
The chief executive of the Délégation Générale pour l'Armement (DGA), Laurent Collet-Billon, attended the meeting as part of the French delegation. The DGA is the French government's arms procurement office.
The meeting was called to decide whether the governments would continue with the A400M program, and if so, to accord a further contract standstill to renegotiate the contract.
Even 24 hours before the meeting, French officials were guarded about the outcome, although they were hopeful the program would continue.
France sees the A400M transport plane as a vital asset in building a European defense capability, and Paris has invested political capital in supporting the program, particularly in keeping Britain in the program.
The ministers agreed on an initial contract moratorium in April, and a month's extension was agreed in Seville, which ran to the end of July. That extension was intended to provide time for the ministers to adopt a common position.
EADS had been looking for a sharing of risk on the program, with the government side taking on responsibility for integrating the four-engine plane's major subsystems.
But the Anglo-French summit meeting earlier this month knocked back that proposition. The leaders insisted that Airbus Military would assume the full burden of risk and continue as prime contractor as stated in the contract, a second French official said.
Assuming the first aircraft delivery is on time - three years after first flight, as promised by EADS - the French Air Force would likely have an operational squadron of about 10 A400M transports around 2015, the second official said.
Britain and France have the most pressing operational need for airlift, with heavy military engagements in Afghanistan. The French Air Force is anxious to maintain the tactical in-theater capability of its air crews and faces heavy maintenance bills to keep its Transall C-160 and CASA transports aloft.
The preferred solution of the French Defense Ministry is to boost maintenance of the existing transport fleet and to lease interim capacity.
OCCAR, the European arms agency, represents the seven countries in the A400M program.
A400M Partners to Renegotiate Contract with EADS - Defense News
The first flight of the A400M is planned for December in Seville, Spain. (EADS)
"I want to thank all my colleagues for their political commitment and for the work done in the last few months, which allowed us to consolidate a major program for European industry and for all our countries," French Defense Minister Hervé Morin said. "We had differences, we had different problems, we have different constraints, notably operational constraints - operational constraints for each country which imposed a different resolution to the program - and we were able to reconcile these differences to allow today to sign an agreement which engages us in a global renegotiation of the contract."
Morin hosted the meeting of ministers from Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey.London sent procurement minister Quentin Davies to the meeting.
Under the agreement, renegotiations with EADS will begin after the August holiday. A meeting will take place Oct. 15 in Germany to present the new terms, which will cover the financial aspects, a new delivery schedule and the conditions.
If the new terms are formally agreed upon at the October meeting, lawyers will draft the documents for signing in December, around the same time as the planned first flight of the A400M in Seville, Spain.
"EADS welcomes the ministers' statement that the A400M is still their preferred choice for future air transport and their agreement to enter into detailed negotiations with Airbus Militar Sociedad Limitada (AMSL) up to the end of the year," the company said in a statement. "On their side, EADS and Airbus are fully committed to finding an agreement that is technically and contractually acceptable to both sides."
Britain came close to pulling out of the program.
Davies said on the sidelines of the meeting here that "a few weeks ago, it didn't look as if we'd be part of the program."
But Britain is now "enthusiastic to save this project if we can," he said. "Britain entered the talks in good faith."
At stake is the cost to EADS of continuing the program. The European aerospace company was seeking extra development funding and a waiver of penalty payments. That is the heart of the renegotiation, Davies said.
A joint declaration after an Anglo-French summit earlier this month said industry - EADS and its Airbus Military subsidiary - would have to face the full consequences of its delays.
The A400M program consumes an average of 100 million euros a month and faces a further three years before delivery of the first aircraft to the French Air Force.
"That will be the outcome of the negotiations," a French official said.
Morin said he had approved the extension of 10 C-160 Transall transport planes for the French Air Force, and the service also will lease aircraft to fill the interim capability gap. The planes would be CASA models or C-130Js, but he had not decided yet.
"All options are open," the French official said.
The ministers met for talks at a luxury private hotel by a hilltop village here, near the southern harbor town of Marseille.
The chief executive of the Délégation Générale pour l'Armement (DGA), Laurent Collet-Billon, attended the meeting as part of the French delegation. The DGA is the French government's arms procurement office.
The meeting was called to decide whether the governments would continue with the A400M program, and if so, to accord a further contract standstill to renegotiate the contract.
Even 24 hours before the meeting, French officials were guarded about the outcome, although they were hopeful the program would continue.
France sees the A400M transport plane as a vital asset in building a European defense capability, and Paris has invested political capital in supporting the program, particularly in keeping Britain in the program.
The ministers agreed on an initial contract moratorium in April, and a month's extension was agreed in Seville, which ran to the end of July. That extension was intended to provide time for the ministers to adopt a common position.
EADS had been looking for a sharing of risk on the program, with the government side taking on responsibility for integrating the four-engine plane's major subsystems.
But the Anglo-French summit meeting earlier this month knocked back that proposition. The leaders insisted that Airbus Military would assume the full burden of risk and continue as prime contractor as stated in the contract, a second French official said.
Assuming the first aircraft delivery is on time - three years after first flight, as promised by EADS - the French Air Force would likely have an operational squadron of about 10 A400M transports around 2015, the second official said.
Britain and France have the most pressing operational need for airlift, with heavy military engagements in Afghanistan. The French Air Force is anxious to maintain the tactical in-theater capability of its air crews and faces heavy maintenance bills to keep its Transall C-160 and CASA transports aloft.
The preferred solution of the French Defense Ministry is to boost maintenance of the existing transport fleet and to lease interim capacity.
OCCAR, the European arms agency, represents the seven countries in the A400M program.
A400M Partners to Renegotiate Contract with EADS - Defense News
