WRAPUP 1-Airbus dogged by compensation claims
By Tim Hepher
PARIS, Oct 2 (Reuters) - Planemaker Airbus was hit by a merry-go-round of compensation claims on Thursday over delays to two of Europe's biggest military and industrial projects, setting it at odds with governments and at least one supplier.
France and Germany confirmed they were seeking penalties for late delivery of the A400M, a 20 billion euro project to supply airlift capacity to seven NATO nations, while Airbus parent EADS has tried in vain so far to pass the tab to its engine makers.
French Defence Minister Herve Morin told Reuters EADS was resisting paying full penalties for late delivery of the A400M, which would come on top of commercial fines paid to airlines for a two-year delay in the A380 superjumbo passenger jet.
"EADS is telling us 'you can't make us pay all that' and we are saying 'we'll see'," Morin said after talks between European Union defence ministers in Deauville, northern France.
An EADS spokesman declined comment.
Top A400M customer Germany took an even tougher stand.
"For me it's the principle of pacta sunt servanda (treaties must be respected). I can only urgently demand that the industry does its utmost to respect treaties," Defence Minister Franz Josef Jung told journalists in Deauville on Wednesday.
The delays are seen as increasingly political as Europe seeks ways of pooling airlift to perform overstretched missions, while the financial crisis tightens pressure on defence budgets.
A candidate for cuts could be the next tranche of EADS-built Eurofighters, developed with Britain's BAE Systems BA.L and Italy's Finmeccanica (SIFI.MI), and EADS has already warned buyers it will ask them for penalties if they trim orders.
On the other hand, EADS faces possible penalties for delays to the naval model of its NH90 helicopter, built by Eurocopter.
"People are saying risks are rising and should be shared," an industry official said this week, asking not to be named.
ENGINES ROW
EADS announced a 6-12 month delay in A400M production a year ago due to engine snags and took a 1.4 billion euro charge.
The plane's designers believe they are paying a high price for a political deal hashed out years ago to allow three rival European engine makers to build the A400M engines together.
Airbus had originally favoured an alternative proposed by a single supplier, Pratt & Whitney (UTX.N) Canada.
Last week EADS indefinitely postponed the A400M's maiden flight, already 11 months behind schedule, and blamed the propulsion system including turbo-prop engines and software.
That sparked a public row with engine makers Rolls Royce (RR.L), Safran (SAF.PA) of France and Germany's MTU (MTXGn.DE), who said they had delivered everything to Airbus on time.
The political pressure over the A400M came as Airbus's core passenger jet business -- already poorer to the tune of several hundred million dollars after compensating airlines for delays to the A380 -- faced a claim from one of its sub-contractors.
French fuselage parts supplier Latecoere (LAEP.PA) said it had been left stranded by delays in completing the A380 in Airbus factories and that it wanted Airbus to hand over money it is owed on the aircraft earlier than scheduled .
Toulouse-based Latecoere is a risk-sharing partner on the world's largest airliner, which is being delivered to customers on average two years late because of wiring installation problems.
Under such deals, suppliers invest money up front to help with development and are reimbursed and rewarded with a slice of revenues when the planes are delivered. That is also the point at which Airbus gets paid for each $300 million, 525-seat jet.
"On the A380 we invested 100 million euros between 2001 and 2006 in research and development and this is paid back from series production," Latecoere CEO Francois Bertrand said.
"Since deliveries have been delayed, we are asking for a part of this R&D to be repaid in advance," he added.
Relations between Airbus and Latecoere soured in May when Airbus pulled out of talks to sell two of its French factories to Latecoere, following a collapse of similar talks in Germany.
Airbus has been placed under considerable financial strain by a weak dollar which favours rival Boeing (BA.N).
Boeing suppliers and airline customers, were meanwhile being forced to revise plans as a four-week-old production strike by Boeing's assembly workers dragged on with no sign of talks.
U.S. components maker Barnes Group (B.N) withdrew its earnings outlook late on Wednesday due to the machinists strike.
In Australia, Virgin Blue (VBA.AX) delayed the launch of a new long-haul service by two months due to a lack of planes.
(Additional reporting by Elizabeth Pineau, David Brunnstrom, James Thornhill, Denny Thomas, Mary Meyase; Editing by Jon Loades-Carter)
