Here's a column from the Financial Times: see:
http://www.ft.com/cms/s/0/49d90b86-fbf6 ... ab49a.html
Why Airbus should ground its military albatross
By Paul Betts
Published: January 7 2010 02:00 | Last updated: January 7 2010 02:00
As a good former military man, Tom Enders knows you get your best advantage in any conflict if you succeed in putting your enemy on the defensive before the battle even begins. The Airbus chief executive is clearly deploying his scare tactics when he threatens to scrap the A400M military transport aircraft programme ahead of the final round of negotiations this month with the aircraft's seven government customers.
His attack appears especially focused on the German government which has been digging its feet over demands by Airbus and its Franco-German parent EADS for more funding. The programme is already more than three years late and is expected to cost up to €31bn against an initial budget of €20bn. The German government is so far refusing point blank to stump up more cash.
Tom Enders may very well be simply rattling the sabre to force Berlin to change its mind and return to the negotiating table. At the same time he may be talking more sense than even he might realise.
For the A400M programme has become a big financial and industrial albatross that Airbus would be far better to cut free.
Airbus should never have attempted to develop a purely military aircraft and its European stakeholders have a lot to answer for by pushing the successful civil aircraft manufacturer into the military zone. From the beginning the programme has been a catalogue of errors.
The first is that any pan-European military project - and the A400M is still the only significant pan-European example of industrial co-operation in the defence sector - can only work if there is a common European defence policy and framework. This is not the case and never has been. Look at the current competition in Brazil between the French Rafale combat aircraft and Sweden's Gripen fighter, not to mention the competition between the Rafale and the EADS Eurofighter.
This internal competition not only weakens Europe's hand in the international market, but means that no one is willing to compromise when it comes to developing a single military product. That is clearly one of the problems with the A400M.
But it is not just the European governments and their defence establishments that are to blame. Airbus itself thought it could apply commercial rules to a military project. With hindsight this was another big mistake and is the reason why it is attempting to renegotiate the fixed price contract with a fixed delivery timetable to force its government customers to share more of the pain.
Those responsible for negotiating the original fixed price contract made another huge error by forgetting to include a penalty clause for the European engine manufacturers they asked to come up with a brand new power plant. Airbus would have preferred to acquire an available turboprop engine off the shelf from Pratt & Whitney of the US.
But it was forced by the governments to opt for an all new engine manufactured by a consortium of leading European aero-engine groups including Rolls-Royce, Snecma of France, Germany's MTU and Spain's ITP.
This in itself was asking for trouble.
For one of the cardinal rules of aircraft manufacturing is that you start with an engine - it can take up to 10 years to develop an entirely new power plant - then follow with the airframe, which takes about five years. Not surprisingly, the new engine was delayed but as a result of the contractual omission it was Airbus that ended up with the bulk of penalty payments.
In the end, all these problems are costing Airbus's core civil business dear.
Worse, they come as the aircraft maker is still struggling to overcome the big financial and operational problems with another albatross - its A380 super jumbo.
In short, this foray into the military world has been a disaster for Airbus and risks undermining its ability to develop a vital new generation of civil aircraft.
The airline industry downturn is making life even more difficult as Airbus enters the investment phase of its new A350 single-aisle mid-range widebody aircraft to challenge Boeing's 787 Dreamliner.
So it might well be that Mr. Enders should take his own advice and ditch the A400M, although it is highly unlikely that the government stakeholders will allow this to happen. Killing the programme would be hugely embarrassing and costly.
But it would at least free Airbus to do what it does best - building civil aircraft.
Of course, it could still carry on converting existing civil airframes for military applications such as air refuelling tanker planes. But this is vastly different from building a military airframe from scratch. After all, Airbus was very successful before it got distracted by its military activities.