Airbus notes A400M progress, but is hit with new penalty charges

13 February 2020

Despite making progress the A400M continues to cause financial problems for Airbus, contributing to a net loss for the Airbus Defence and Space division in 2019. Source: Jane's/Gareth Jennings

Airbus noted progress in the delivery of the promised capabilities of its A400M airlifter, but has been hit with additional penalty charges pertaining to continued programmatic shortcomings.

The company successfully rebaselined its contract with the European defence agency OCCAR and the seven partner nations in July 2019 and continued to rollout the aircraft's capabilities, but faced EUR1.2 billion (USD1.3 billion) in added charges across the wider programme, Airbus CEO Guillaume Faury said at the company's annual press conference in Toulouse.

"[We] completed the rebaselining [of the A400M programme] and [have] made great progress on its technical capabilities, [but] we have had to revise our export assumptions and recognise an additional charge notably also in the face of the continued German export ban on Saudi Arabia. These charges have [helped] push our 2019 results into a net loss […] and we cannot be satisfied with that", Faury said on 13 February.

The rebaselined contract with OCCAR and the launch nations of Belgium, France, Germany, Luxembourg, Spain, Turkey, and the UK, is a cost neutral agreement designed to 'achieve the A400M's full suite of contracted capabilities and retrofit schedule while also keeping the programme on a sound financial footing'.

Speaking at the Paris Air Show on 19 June, Alberto Gutiérrez, Head of Military Aircraft at Airbus Defence and Space, said that the new arrangements "reflect the reality of the situation", and that they put the industrial programme back on track. Even so, Airbus is still being hit with penalty charges that, combined with a lack of additional export orders since Malaysia joined the programme in 2005, have conspired to push the Airbus Defence and Space (DS) division into 'the red'.

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