AIRSHOW-UPDATE 1-Engine woes again force A400M out of air demo -sources
* Airlifter on static not flying display at Farnborough -sources
* Problems with maturity of engine development
* Echoes last-minute withdrawal from Paris display in 2011
By Cyril Altmeyer and Tim Hepher
PARIS, July 4 (Reuters) - Airbus is pulling Europe's A400M airlifter out of flying displays at next week's Farnborough Airshow due to continued engine problems, forcing it to sit out popular annual stunts for the second year running, industry sources said.
The move repeats a decision at last year's equivalent event outside Paris, but is not expected to disrupt plans to deliver it to its first customer, France, around the end of the year.
The A400M cost 20 billion euros to develop and is designed to add airlift capacity for seven European NATO nations -- Britain, Belgium, France, Germany, Luxembourg, Spain and Turkey.
It has suffered a series of teething problems that led to a four-year delay and billions of euros in cost overruns, mainly due to engine software delays and glitches with other systems.
A gearbox failure forced Airbus to scratch the A400M from the flying display list on the eve of last year's Paris show.
Continued problems mean it will again be withdrawn from the prestigious flight displays at next week's Farnborough Airshow in the UK, but it will be flown in and parked on display for visitors from potential importing countries and other delegates.
"Based on engine issues it has been decided not to participate in the flight display but the aircraft will be on static display," an industry source told Reuters.
The A400M has not been grounded and has been seen at several events in the past year. But the gearbox problems have led to restrictions that would rule out the kind of stunts popular at Farnborough, such as the A400M's trademark steep, slanting turn.
Airbus last week announced the A400M and A380 -- respectively Europe's largest defence and commercial aviation projects -- would be on the Farnborough flying display, which unusually this year also features a 787 jetliner from Boeing.
Airbus had no immediate coment on any change in its air show plans but stressed its delivery plans were on schedule.
"The engine maturity is still not where we want it to be, but the schedule is not affected and we expect the first delivery at the turn of the year," an Airbus spokesperson said.
Maturity refers to the speed at which problems common in aircraft developments are ironed out in flight testing.
Eyes in the aircaft industry will be on the loss-making aircraft's status as it awaits full certification around mid-year, a step that must be completed before it can be delivered and bring in further payments for Airbus parent EADS .
"The problem with the gearbox on the A400M is not completedly resolved," said a source with direct knowledge of the project, adding, "It's pulling too hard".
The A400M is powered by the West's largest turboprop engines and designed to perform multiple roles in remote or rugged locations, fitting between the smaller Lockheed C-130 turboprop and larger jet-powered Boeing C-17.
Air chiefs from nations that launched the A400M are due to adopt the airplane - nicknamed "Grizzly" by its pilots - by renaming it "Atlas" at a ceremony at a military show on Friday.