A400M Transporter sends Airbus Profits South

The ongoing problems with the A400M (military transporter) have sent Airbus's 2016 profits dramatically down, gaining 995 million euros, a drop of 63 percent y-o-y.  This, despite an overall 3 percent increase in sales, totaling 63 billion euros. Hence, Boeing’s arch-rival earned only half as much as expected by analysts last year.

Airbus‘ problem child A400M  -  company courtesy
Airbus‘ problem child A400M - company courtesy

The European aircraft manufacturer blamed unfavorable exchange rates together with accruals for future A400M expenses amounting to 2.2 billion euros, making both mainly responsible for the sobering financial result.   
Since the turboprop’s maiden flight on 11 December 2009 the aircraft was hit repeatedly by technical problems, leading to enormous extra costs Airbus had to shoulder year after year. The four engine propeller driven transporter was jointly commissioned by the NATO partners Germany, Belgium, France, Great Britain, Luxembourg, Spain and Turkey in 2003. However, due to technical mishaps and individual wishes of the buyers regarding the operational capabilities and scope of applications, the delivery of the aircraft was delayed considerably.

New concessions demanded
Last year, Airbus delivered seventeen A400Ms to their contracting parties; in 2015 it was only eleven.
In light of the ongoing problems with the A400M, Airbus demanded new concessions from the buyers. Airbus CEO Tom Enders urged, "we need to stop the financial bleeding and take risks out of the program.” The company aims at negotiating the contracts with its clients anew. This not mainly because fresh money has to be injected to keep the program afloat, but mainly - among other things - the reduction of the high contract penalties. "We are not back in the year 2009," exclaimed Enders. That year, the buyers had rescued the A400M project by injecting billions in the program, to prevent its collapse.
The A400M program was given the green light by the seven NATO member states for replacing the aging fleets of Transall C-160 transporters and Lockheed C-130 Hercules, securing Italy, Turkey, the UK and others sufficient uplift capacity for military and humanitarian missions whenever needed.
It seems there is still a long way to go to achieve this goal.

Heiner Siegmund

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