Airbus: building run of less than 170 A400Ms not economical.

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Airbus says more order cuts would undermine A400M

Credit: Reuters/Joerg Sarbach/Pool

BERLIN | Fri Aug 6, 2010 11:35pm IST

BERLIN (Reuters) - Airbus said on Friday that further cuts in orders for its A400M military transport planes, as one politician from Germany's ruling coalition suggested this week, would mean production would no longer be worthwhile.

The manufacturer cannot afford to build fewer than 170 of the A400M planes, a company spokesman said on Friday after a German politician called for a further cut in Germany's order.

"There would be no economic foundation for the A400M programme with under 170 planes," an Airbus spokesman said.

Juergen Koppelin, defence expert for the Free Democrats, coalition partners of Chancellor Angela Merkel's conservatives, said Germany should reduce its order by 20 planes to 40.

"The 60 transport planes that previous governments planned are not necessary," said Koppelin in a statement.

Airbus parent company EADS(EAD.PA) reached a deal in March with seven European NATO nations, including Germany, that allows them to cancel up to 10 of the planes they ordered in total.

They had originally ordered 180 A400M planes and Koppelin's suggestion would reduce that to 160 without taking into account cancellations by any other countries.

Britain, which has ordered 25 A400Ms, is expected to cancel three as part of the March deal, leaving the other countries with seven possible cancellations to stay within the contract.

Last month EADS chief executive Louis Gallois said that so far in the negotiations nobody had challenged the assumptions of the deal reached in March or moved to cancel more planes.

On Friday an EADS spokesman told Reuters: "There are no signs that one of the nations will not stick to the deal."

The A400M, which European powers had hoped to use in Afghanistan starting from 2009, is designed to transport soldiers and heavy equipment to combat zones.

But technical problems in developing the West's largest turboprop engines have helped push the 20 billion-euro project years behind schedule and billions of euros over budget, at some point threatening 10,000 jobs.

As part of a planned structural reform of the German defence system and an effort to cut billions of euros from the defence budget, Germany's Defence Ministry has been looking for months into reducing the number of A400Ms it will buy.

"Given the contract adjustments that are yet to happen and pending further investigations, we cannot say anything now about the size of the reduction (of the A400M order) by Germany," a spokesman for the defence ministry said.

Results on the reform plans of the Bundeswehr are not expected before the autumn.

(Reporting by Sabine Siebold; Writing by Annika Breidthardt; Editing by Greg Mahlich)