September 28, 2009 / 2:56 PM / 8 years ago

UPDATE 1-Spain "very optimistic" on Airbus A400M

* Fresh talks scheduled for Germany in October

* EADS shares up 2.3 percent

GOTHENBURG, Sweden, Sept 28 (Reuters) - Spain is “very optimistic” a deal will be reached to rescue Europe’s largest defence project, the delayed Airbus EAD.PA A400M military transport plane, defence minister Carme Chacon said on Monday.

Seven European NATO nations have agreed to renegotiate their contract with Airbus parent EADS to try to prevent production delays and financial losses derailing the 20 billion euro ($29.3 billion) project.

They have called a meeting for mid-October in Germany.

Asked how optimistic she was about the outcome of that meeting, Chacon said, “A lot. Spain is very optimistic about our capacity to agree and co-operate in our goal, which is a strong policy for the European defence industry.

“At the end of this year we are going to be able to witness the first flight so we are really optimstic,” she told reporters on the sidelines of a meeting of European Union defence ministers in Sweden.

If the project goes ahead the turbo-prop plane will be assembled in Seville, southern Spain.

EADS shares were up 2.3 percent at 15.07 euros.

The A400M has been hit mainly by delays in engine software development, forcing Europe’s largest aerospace group EADS to take 2.4 billion euros in charges on its balance sheet.

EADS has warned that even if the project goes ahead, it faces further substantial charges to purge remaining losses.

Ministers agreed in July to seek a new contract by end-year and scheduled the October meeting to review progress.

Talks are so far said to have been proceeding slowly ahead of Sunday’s election which saw conservative Chancellor Angela Merkel headed for victory in a new coalition. [ID:nLS158960]

Germany is the biggest buyer, with 60 planes on order out of 180 originally commissioned by the seven NATO launch nations.

Britain pulled back in July from a threat to walk away from the project. But analysts said it could reduce its order for 25 aircraft or seek to spread its commitment over a longer period.

Other launch nations include France, Belgium, Luxembourg and Turkey. A further 12 planes have been earmarked for exports to Malaysia and South Africa. (Reporting by David Brunnstrom; Writing by Tim Hepher; Editing by Dan Lalor)) ($1 = 0.6822 euro)

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