February 8, 2010 / 11:01 AM / 8 years ago

UPDATE 2-French official sees A400M deal soon

* Seeking deal as quickly as possible, arms official says

* No date yet announced for talks to resume

(Adds background)

By Matthias Blamont

PARIS, Feb 8 (Reuters) - A keenly awaited deal on the future of the troubled A400M military transport plane, affecting up to 10,000 European jobs, could be reached this week or next, France’s top arms procurement official said on Monday.

“We hope to have an agreement as quickly as possible; that could be this week or next,” Laurent Collet-Billon, head of the DGA arms procurement and export agency, told reporters.

France has ordered 50 of the troop and heavy equipment cargo planes developed by EADS EAD.PA subsidiary Airbus.

It is one of seven countries that ordered a total of 180 airlifters for deployment in rugged areas such as Afghanistan.

Total development costs have ballooned by 11 billion euros and deliveries have been pushed back four years to 2013, raising doubts over the future of Europe’s biggest defence project.

EADS and seven commissioning nations, including France, are locked in negotiations over a rescue deal, with EADS appealing for more than 4 billion euros of additional public funding.

Talks held last Thursday raised the prospect of government loans to help bridge a 2.4 billion euro gap in the amount EADS and buyers are prepared to invest in keeping the project afloat, but Germany said nothing been set in stone. [ID:nLDE61405Y]

No date has yet been announced for the talks to resume, but Collet-Billon said parties wanted to keep up the pace of talks.

He confirmed that nations were ready to waive penalties for late delivery in the event of a funding deal.

“If the negotiations are successful, it is absolutely clear that governments will make a big effort on penalties,” he said.

The A400M plane stems from a 25-year collaborative effort to wean Europe off transport capacity provided by Lockheed Martin (LMT.N) and Boeing (BA.N) but has been dogged by disagreements over industrial decisions, investment and timetables.

    But Collet-Billon hit back at Airbus suggestions that political interference should be blamed for part of the delay.

    “The delay in the programme shows up serious deficiencies on the industrial side. I am not so sure that (buyers) are to blame. You should really ask more about how the contract was executed,” he told an annual briefing on French arms sales.

    A German newspaper reported that EADS wanted its suppliers to take on more risks including some of the cost overruns linked to the production problems. [ID:nLDE617097]

    Airbus has sparred not only with buyers but also with its engine makers over responsibility for the delays, after problems with engine control software and the complex task of integrating on-board electronics. Suppliers say they have delivered on time.

    The A400M, which first flew in December, is powered by the West’s most powerful turbo-prop engines from a European consortium including Britain’s Rolls-Royce (RR.L), French group Safran (SAF.PA) and MTU Aero Engines (MTXGn.DE) of Germany.

    France’s Thales (TCFP.PA) supplied the aircraft’s flight management system, or electronic “brains”.

    The DGA agency meanwhile said French arms firms had won 8 billion euros of export orders in 2009, up 21 percent.

    Total French defence orders reached 20.9 billion euros including 1.3 billion euros linked to an economic stimulus plan.

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