Louis Gallois, the chief executive officer of EADS, addressed a special session of the Assembly of the Western European Union (WEU), on 24 March in Brussels.Europolitics was present and obtained additional details, reproduced verbatim below, with notes.

The causes of the delay. “EADS underestimated the capacity and complexity of the programme. We agreed to deliver the aircraft in six and a half years when no other programme of this type has delivered in less than 12 years. In response to the demands of our French and British clients, which had transport problems, we accepted an overly ambitious calendar. […] If we deliver the aircraft within a ten-year range, we will still represent a benchmark in the field. On top of that comes EADS’ overly complex organisation. We reorganised the programme under the exclusive supervision of Airbus, setting up the Airbus Military business unit. This organisation is now effective.” [The delay is therefore at least three to four years, possibly a bit more].

A contract to be reviewed. “Our enterprise underestimated the ambitions and challenges. We signed a commercial contract that is not necessarily adapted to this type of aircraft, assuming the risks, in the absence of a risk evaluation programme, without a prototype, starting from scratch. That was a major mistake by our company. […] Now we need to review the contract in order to get back to reality: the calendar and the required standards.”

The cost of the delay. “The programme is expensive for EADS. The programmed loss is more than €2 billion even before the first flight. […] The penalties EADS might have to pay add up to €1.4 billion. So far we have not paid anything. We will pay the penalties when the aircraft are delivered. They have already been placed in a reserve in our books.” [Only a part of the penalty payments has been placed in this €2 billion reserve, according to Gallois.]

Interim solutions. “We are aware of the delay. We are going to propose transitional solutions to our clients, particularly the French and British, to plug their transport gap: light cargo aircraft, transport A330s [long-distance] and prolongation of existing capacities through maintenance works.” [The EADS CEO did not say the firm would pay for these solutions. Gallois smiled atEuropolitics’ question, adding “I didn’t say that”.]

Termination of the contract. “If the first flight has not taken place – and it will not have taken place – by 31 March, the countries may indeed come to a consensus to terminate the contract. We would then have 60 days to return the €5.7 billion received for predelivery of the aircraft. But unanimity will be necessary. We haven’t reached that point yet.”

Economic consequences. “Any reduction in orders will have an impact. First of all, the price will change. And there will also be consequences for the industry.” [Gallois estimates that around 40,000 jobs for Airbus and its subcontractors depend on the programme, one third of them in France.] “A presence on the military market enables Airbus to strike a balance through this more regular activity with the more cyclical civil activity.”

First flight. “I hope the first flight will take place at the end of the year, but that will depend on the feasibility of the FADEC [the engine control software system].”

A remarkable aircraft. “The A400M is a unique aircraft. It will still be in service in 2050 so it has to attain a technological level allowing it to last 30 to 40 years. It combines in a single unit the functions of a strategic and tactical aircraft. It can carry 37 tonnes on a strategic mission. It has functions similar to those of a modern fighter plane and is more complex than the two most recent European fighters [Eurofighter and Rafale]. It will have civil certification, which is a first for a military aircraft. That represents a tremendous technical constraint but it is also a guarantee because it protects the aircraft from regulations in the coming years (which could lead to a ban on military aircraft in civil air corridors). Lastly, the cost-performance ratio is remarkable.”

The United States is interested. “The Americans are not developing a competing aircraft. They are following our programme very closely and have asked us to keep them informed. They say this aircraft interests them. […] This aircraft fills a gap between the [smaller] C27 or C130 and the [larger] C17 or C5. […] Once the difficulties have been resolved and the first deliveries made, the A400M can tackle the export market, an important market. In the longer term, the aim is to replace the 3,000 or so Lockheed C130 Hercules now in service.”