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Germany to seek penalties as Airbus A400M deliveries lag

Tue, 13th Dec 2016 16:36

By Andrea Shalal

BERLIN, Dec 13 (Reuters) - A sixth new Airbus A400Mmilitary transporter plane is due to arrive in Germany onWednesday, with another likely to follow before the year's end,but Airbus faces penalties for the late deliveries, the Germandefence ministry said on Tuesday.

The European multinational A400M programme is years behindschedule, with Germany's share of the costs having risen to 9.6billion euros ($10.2 billion) from an initial estimate of 8.1billion euros, according to a ministry report to parliament.

Each of the planes are now estimated to cost 181 millioneuros, up from an initial 153 million, the report said.

In August the ministry asked Airbus for 12.7 million eurosin damages for delays in delivering another A400M aircraft itreceived in July, and a ministry spokesman said it would seekdamages for delays in subsquent deliveries as well.

According to the original delivery plan, Germany should havereceived 11 A400Ms in 2016, and should have a total of 17 planesaltogether. Instead, it will have seven at year's end.

In addition, the ministry plans to withhold an unspecifiedamount due in payment to Airbus given certain "shortfalls" inthe radar and defensive capabilities of the first tactical A400airlifter, a defence ministry spokesman said on Tuesday, withoutproviding details.

Those funds would be paid to Airbus once the capabilities onthe aircraft reached required levels, he said.

The first tactical aircraft, which Germany formally acceptedin Seville, Spain on Monday, is due to arrive at an air base innorthern Germany late on Wednesday, with a seventh A400M likelyto arrive on Friday, a spokesman for the German air force said.

Airbus spokesman Kieran Daly declined to comment on anypenalties or shortfalls and said the company remained in"lengthy and complex" discussions about its contracts withparticipating countries.

Meanwhile, experts from the German and French defenceministries are due to complete plans to jointly operate a fleetof smaller Lockheed Martin Corp C-130J Super Herculestransport planes by the end of the year, according to a ministrysource.

German Defence Minister Ursula von der Leyen announced plansin October to acquire four to six C-130Js and operate themjointly with France as a complement to the expected fleet of 40A400M aircraft.

Germany has modified its military procurement process in thewake of the A400M problems and now insists on companies assumingmore responsibility for delays and technical issues.

However that approach has led to delays in two keymulti-billion-dollar projects - the MKS 180 multi-role warshipsprogramme and a new missile defence system to be developed andbuilt by Lockheed and the multinational European missiles jointventure company MBDA, owned by Airbus, Britain's BAE Systems Plc and Italy's Leonardo Finmeccanica SpA ). ($1 = 0.9383 euros) (Reporting by Andrea Shalal; Editing by Greg Mahlich)

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