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04 November 2010
04. November 2010 Company

Ad-hoc release, 5 November 2010: EADS and Airbus welcome A400M agreement with customer nations


EADS and Airbus welcome the conclusion of negotiations with OCCAR and the seven A400M launch customer nations. The agreement, finalised today in Toulouse in the presence of the French Defence Minister Hervé Morin, the national armament directors and other representatives from all customer nations, is the long awaited further detailing of the principle agreement reached in March 2010.
While the overall economics of the March agreement remain unchanged  (for details see the EADS press release from 5 March 2010 – attached), the government payments are now more back-loaded than previously expected. Negotiations on the export levy facility (ELF) scheme are expected to be finalized before the end of the year.

“The A400M flight test programme is making excellent progress and demonstrates the soundness of the product. We are very proud of the achievements so far and are now moving towards the series production by the end of the year”, said Domingo Ureña, Managing Director of Airbus Military.

About the A400M:

The A400M is an all new military airlifter designed to meet the needs of the world’s Armed Forces in the 21st Century. Thanks to its most advanced technologies, it is able to fly higher, faster and further, while retaining high manoeuvrability, low speed, and short, soft and rough airfield capabilities. It combines both tactical and strategic/logistic missions, while being also able to be used as a tanker plane. With its cargo hold specifically designed to carry the outsize equipment needed today for both military and humanitarian disaster relief missions, it can bring this material quickly and directly to where it is most needed. Conceived to be highly reliable, dependable, and with a great survivability, the multipurpose A400M can do the job of three of today’s different aircraft models in a single one. This means smaller fleets and less investment from the operator. Able to do more with less, the A400M is the most cost efficient and versatile airlifter ever conceived and absolutely unique in its capabilities. The A400M launch customer nations include Belgium, France, Germany, Luxemburg, Spain, Turkey and the UK.

About EADS:

EADS is a global leader in aerospace, defence and related services. In 2009, the Group – comprising Airbus, Astrium, Cassidian and Eurocopter – generated revenues of € 42.8 billion and employed a workforce of more than 119,000.

ATTACHMENT: EADS press release of 5 March 2010

Customer Nations and EADS Come to Principle Agreement on A400M – Additional provision to be Booked

Leiden, 5 March 2010 – The Customer Nations and EADS have come to a principle agreement regarding the A400M military transport aircraft with the intention to amend the original contract accordingly in the coming weeks.
In this principle agreement, the Customer Nations agree to:

  • Increase the price of the contract by €2 billion;
  • Waive all liquidated damages related to current delays;
  • Provide an additional amount of €1.5 billion in exchange for a participation in future export sales (Export Levy Facilities).
  • Accelerate pre-delivery payments in the period of 2010 to 2014, a new schedule of which will be finalised in the amended contract;

Based on this agreement, an estimate at completion of updated revenues and costs including an assessment of risks, reviewed by the EADS Board of Directors, leads to an increase of the A400M loss provision of € 1.8 billion pre tax for the full year 2009. The update of the provision is based on a management assessment taking into consideration the principle agreement between EADS and the seven Nations.

EADS EBIT* and net income will be negative in 2009 after incorporating this charge. Results will be released at EADS’ Full Year 2009 disclosure on 9 March 2010, including notes to the financial statements to be released with the full year accounts comprising of more information about details of the principle agreement including underlying management assessment. If substantial changes on the assessment were to occur, EADS performance could be significantly impacted. EADS will provide further information of the amended contract once the negotiations are finalized. The A400M cash flow profile for the coming years is still to be negotiated in the contract amendment; all parties are willing to mitigate negative cash impacts as far as possible.

EADS considers that this agreement provides a sound basis for a successful evolution of the A400M programme. EADS will strive to identify opportunities to significantly reduce risks in the A400M programme and to deliver a state-of-the-art product within the new frame of the contract. EADS thanks the nations for the decisive support they are bringing to the programme through this agreement.

* EADS uses EBIT pre goodwill impairment and exceptionals as a key indicator of its economic performance. The term “exceptionals” refers to such items as depreciation expenses of fair value adjustments relating to the EADS merger, the Airbus Combination and the formation of MBDA, as well as impairment charges thereon.

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