Military aircraft contract delayed

The seven partner nations behind the A400M military transport aircraft have agreed to a further delay while they renegotiate the contract for the over-budget programmer with the supplier from scratch.

A new contract with EADS, the Franco-German parent of Airbus that is building the aircraft, could be signed by the end of the year, the French defense minister said after meeting his peers in southern France. But analysts pointed out that it was the details of any new contract that would matter.

"The customers are still on board and EADS probably won't get hit with penalties," said Nick Cunningham with Evolution Securities. "But it will likely be down to them to pay for the additional development costs which could be as much as €3bn."

The A400M has been hamstrung by technical problems and is more than three years late, at least €2bn ($2.8bn) over budget and is costing EADS, €100m a month.

News Source: http://www.ft.com