Airbus faces $1.4bn payout for A400M delays

European aerospace manufacturer Airbus has been forced to pay a large one-time payout for delays to its much-maligned A400M program.

An Airbus A400M transport aircraft. Image courtesy of Airbus.
An Airbus A400M transport aircraft. Image courtesy of Airbus.

The company announced in its full-year 2017 report that it would have to make a payment of €1.3bn ($1.4bn) in order to mitigate the “impact of the adaptions on schedule, capabilities and retrofit” for the aircraft.

The A400M ‘Atlas’ is a heavy military transport aircraft, designed to compete with aircraft such as the C-130 and C-17 manufactured by US companies Lockheed-Martin and Boeing.

It is the largest, and most expensive European aerospace project, and has faced multiple programs over the course of its development. The original budget of €20bn ($24.5bn) has been significantly overrun, and Airbus itself has written-off up to €7bn ($8.68bn) on the project.

The aircraft’s development has been slowed due to mismanagement, over-promises and poor contractor choices compounded by the political need to distribute suppliers across the European Union.

At one stage in 2010, the program was almost canceled entirely and only continued due to a €3.5bn ($4.34bn) lifeline supplied by the buyer nations.

The program hit an all-time low in 2015 when one of the aircraft crashed in Spain on its first flight, killing 4 Airbus personnel.

This most-recent payout by the company refects multi-year delays, and the compounding effects this has had on loss-making contract provisions. Nonetheless, the company remains upbeat about the future of the aircraft.

“On A400M, we made progress on the industrial and capabilities front and agreed a re-baselining with government customers which will significantly reduce the remaining programme risks. This is reflected in a substantial one-off charge,” said Airbus CEO Tom Enders.

Over the last year, the company managed to produce 19 of the A400M aircraft, up from 17 in the same period the year before.

Nonetheless, further controversies are hitting the craft, with new documents being obtained by Reuters showing that some NATO nations are now acknowledging that certain complex features of the craft will not be available due to delays.