OCCAR to kickstart talks to rescue A400M: sources

PARIS (Reuters) - A European arms agency grouping 7 NATO countries has formally agreed to enter talks with Airbus parent EADS (EAD.PA) over delays to its A400M military transport plane, averting immediate cancellation of the contract, two European defense sources said on Monday.

Procurement agency OCCAR is expected to give the official green light for talks this week, the sources told Reuters.

The move means EADS and commissioning nations including France, Germany and Britain can discuss whether to waive delivery penalties that EADS says would the sink 20 billion euro defense project, Europe's largest single arms procurement.

The 7 nations earlier this month agreed a three-month moratorium to prevent the project being canceled on an April 1 deadline. However the new talks aimed at redressing the project could take at least twice as long, one defense source said.

EADS declined comment. OCCAR was not available for comment.