The double battle of the biggest Spanish military airplane

MADRID | According to the Spanish daily newspaper Expansión, the A400M (the largest European military airplane) made by Airbus Military is waging a double war. In the first place, it must comply with the new deadlines that were established after the programme was restructured last year. In second place, it must sell 400 planes in order to amortise the three year test flight delay that the prototype suffered and that cost €8 billion.

“The San Pablo factory in Seville, where the final assembly of the aircraft takes place, has already started the construction of the first unit that is destined to start flying. The French Air Force will receive it between the end of 2012 and the beginning of 2013.

“Starting from now, the manufacturing will continue to pick up speed to meet the delivery calendar dates since EADS must deliver 170 planes during this decade to the eight client countries.

“Its second equally great and imperative objective: to sell 400 additional crafts to the international market […] We must remember that the A400M […] suffered a delay of over three years in its first scheduled test flight. Along with that, it had to be refinanced with €8bn due to additional costs. EADS assumed €4bn while the client countries took on the rest (Spain disbursed €225 million extra).

“The countries made this fund injection with export credits and with a clear demand in exchange: this financial aid will have to be reimbursed as planes are sold to the external market. To return all the credits 300 units must be sold along with another 100 if the programme is to be profitable.”

What will happen if this does not occur?

“Airbus Military does not contemplate this scenario and it is outlining a marketing plan destined to overcome all of its major US rivals: the C130 Hercules by Lockheed (with a 20 ton transport capacity) and the C-17 by Boeing (50 tons).  The A400M occupies an intermediate place with the capacity to transport approximately 37 tons.”

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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