Airbus pleads for cash over A400M military plane

The European plane maker's huge military transport aircraft has been dogged by delays and penalties but it is appealing to governments for some leniency.

An Airbus A400 military aircraft participates in a flying display during the 51st Paris Air Show at Le Bourget airport near Paris, June 16, 2015.  REUTERS/Pascal Rossignol (FRANCE  - Tags: BUSINESS TRANSPORT)
Powered by automated translation

Airbus hopes to get “significant” financial help from European governments to ease renewed problems with its A400M military transport aircraft, its chief executive Tom Enders said on Wednesday.

In February, Airbus called for further help on Europe’s largest defence project, following penalties for delays and a contract clause allowing buyers to withhold some cash payments.

In late March, Airbus held talks with European purchasing governments who decided to maintain the penalties, but did not rule out some short-term flexibility.

“We are very grateful that governments have responded to our plea to engage in these discussions, which will hopefully bring significant financial mitigation,” Mr Enders told an annual shareholder meeting.

The chief executive said the drain on cash from the A400M problems should be reduced beyond 2018, after which the company would demonstrate strong potential for cashflow generation.

Mr Enders noted other finiancial headwinds, including delays in deliveries of the A320neo, the plane maker’s latest narrowbody jet, which has been held up by shortages of one type of engine.

He cited figures suggesting Airbus, whose main rival is Boeing, gets US$1.5 million more profit for each A320neo, a fuel-saving version of the most popular European jet.

The A350 supply chain has improved but some bottlenecks remain following delays in cabin deliveries, he added.

Mr Enders said Airbus still did not know when, or to what extent, European governments would offer new export credits to support jet sales. The system was frozen last year amid a UK probe into suspected fraud, which has since widened to French prosecutors.

* Reuters

business@thenational.ae

Follow The National's Business section on Twitter