EADS and the A400M: the Real Story

MUNICH --- Most of the media coverage from EADS’ annual financial results conference held here March 10 focused on the fact that a legal clause allowing customers to pull out of the A400M program will kick in on April 1, and played up the fact that in this event EADS would have to repay governments 5.7 billion euros.

But this is neither newsworthy – the cancellation clause was first revealed in a report released by the French Senate on Feb. 10 – nor accurate, as the cost to EADS in the event of cancellation would be far higher.

The company has already taken provisions of over 2.15 billion euros on the program – of which 704 million euros in 2008, it said March 10 – and more are to be expected, as "revised industrial plans to complete the A400M program could lead to a significant charge, weighing on earnings before interest, depending on the outcome of negotiations with customers and suppliers," according to its press release. These negotiations are expected to begin in April.

Cancellation, however, is not an option as OCCAR, the agency which awarded the contract on behalf of participating nations, can only cancel it if all governments unanimously agree to do so. France, Germany and Spain have said they have no intention of pulling out, so unanimity is impossible, and thus so is cancellation.

And that’s not counting the airlift needs of countries which don’t operate the C-130, or which find the C-130J too small or too short-legged.

That's why they call it a C-17 for this market! :-)

Riiiight.. and and the A400m’s 27 tons REALLY fills that gap up, doesn’t it?

Lockheed thinks so Lockheed Explores Niche For Widebody C-130

IMHO Lockheed are the delusional party here. By 2020 when it gets around to putting the C-130XL on the market, customers looking for a 30 ton freighter not as cramped as the C-130 will have selected A-400M, or Kawasaki C-X. Both faster than the plus size herc.

By 2020...customers looking for a 30 ton freighter...will have selected A-400M

Some maybe but customers don't move that fast. That is only 11 years off and airbus has been working on the A400m for almost that long already.

Since Lockmart already has many 130s in service and has done the development then the wide body would be cheaper overall to develop than the A400. So they need fewer buyers to pay off the costs. The objective is to keep the 130 plant operating and the thousands of workers there working. That is the same reason they made the 130j even though no one had asked for it.It was a big gamble and it took them a while to get many orders.

There is nothing delusional about it. With the hand they are dealt they can look at a much bigger midsize plane that will take much longer to develop, do the 130 thing, or do nothing. Going the route of an all new plane is a much bigger gamble.

An upsize herc would only have to sell a few to the US to be a success and there is little chance of the US buying either of the other two. Will it be the 'best plane' out there? Maybe not. Will it sell? Probably.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.