BERLIN, Jan 20 (Reuters) - A report blaming Airbus EAD.PA managers for huge cost overruns on the delayed A400M military transporter turned up the heat on the planemaker in a row over who will foot the bill. [ID:nLDE60J0JB]
Following are some key findings from the PricewaterhouseCoopers (PWC) audit:
- PWC said it found no evidence that robust systems had been established to monitor costs booked to the A400M programme against the actual value delivered. There is no mechanism to understand how advanced the programme is.
- The budgeting process of Airbus parent EADS has consistently and significantly underestimated the costs of the A400M and concluded the current process has limited value.
- The total anticipated cost overruns for A400M are 11.2 billion euros. This can be cut by 3.6 billion euros through management changes, leaving a realistic anticipation of an expected loss of 7.6 billion euros.
- Processes and management will require significant improvement in order to deliver cost savings.
- The main cost driver and reasons for cost overruns were the technical complexity of the aircraft and the numerous design changes.
- Assuming a loss of no more than 7.6 billion euros, EADS is likely to suffer a credit rating downgrade but should still be able to access funding.
- Cancelling the contract would have more severe implications for EADS than continuing with it due to a more adverse credit rating impact and the likelihood that funding sources would be restricted. It also noted the market has not factored a cancellation into its assessment of EADS. (Reporting by Sabine Siebold; Editing by David Cowell)