January 8, 2016 / 1:21 PM / 5 years ago

UPDATE 2-Airbus A400M deliveries to Turkey seen delayed in 2016 - official

* One of 2015 deliveries did not happen due to May crash

* Talks continuing on delivery of replacement

* Delays seen in two planned 2016 deliveries (Adds Airbus comment)

By Tulay Karadeniz

ANKARA, Jan 8 (Reuters) - Deliveries of two Airbus A400M military transport planes to Turkey in 2016 are expected to be delayed and talks are ongoing on delivery of a replacement for one that crashed on its maiden flight last year, a defence official told Reuters.

Ankara signed a deal for 10 of the Airbus heavy cargo and troop carriers in 2003 as part of a group of seven European NATO nations, expecting its order to be fulfilled by 2018.

Turkey received two of the aircraft in 2014 and was due to receive two more last year, but only one was delivered. The second plane crashed in Spain on May 9, killing four test crew.

“Talks are continuing on the delivery date for the replacement,” an official from the Undersecretariat for Defence Industries (SSM), part of Turkey’s defence ministry, said on condition his name was not used.

“According to the A400M agreement, two aircraft should be delivered to the Turkish Air Force in 2016, in April and June. But it is anticipated that there will be delays in these deliveries,” he added.

The delivery calendar had to be updated after last year’s crash and a subsequent halt in testing, the official said.

A spokesman for Airbus Defense & Space said the company was in the process of finalising the schedule for A400M deliveries in 2016 with Occar, a European agency that manages joint defence programmes. “When it’s agreed, then we’ll announce it.”

A source close to the matter said it was still envisaged that two A400Ms would be delivered to Turkey this year, although there was a “complicated” discussion under way on when a replacement for the crashed aircraft could be delivered.

“Turkey is broadly on track, probably some months later than they would like to be, but essentially they are on track,” the source said.

The crash struck a fresh blow to Europe’s largest defence project which was already struggling to overcome delays and cost overruns that led to a bailout by European governments in 2010.

Reuters reported in July that the accident had led to new development delays of up to three months.

Airbus took a fresh charge of 290 million euros ($315 million) in July because of the delays, bringing cumulative provisions on the project to more than 5 billion euros.

The company said then that the crash had caused setbacks for the delivery schedule that were still being assessed.

NATO ally Turkey occupies a crucial strategic position, bordering Iran, Iraq and Syria and is a member of the U.S.-led coalition against Islamic State.

The A400M troop and cargo plane was developed for seven European NATO nations - Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey - at a cost of 20 billion euros ($22 billion). It entered service in 2013 after a delay of more than three years.

The planes, costing just over 100 million euros each, are assembled in Spain, which has long sought to emerge from France and Germany’s shadow within Europe’s largest aerospace company.

After the May crash, flights of the two aircraft previously delivered to the Turkish Air Force were suspended for safety reasons. However, defence industry officials said flights of the two planes resumed on June 18 last year. ($1 = 0.9207 euros) (Additional reporting by Cyril Altmeyer; Writing by Daren Butler; Editing by Ayla Jean Yackley and Adrian Croft)

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