Airbus upbeat on prospect for A400M export contract this year

9 July 2018

Airbus said on Friday it was optimistic it could sign a first export contract for its troubled multi-nation A400M military transport plane this year, and expressed growing confidence about prospects for European defense cooperation.

Airbus Defence and Space Chief Executive Dirk Hoke said the company had been in negotiations with a potential buyer for the A400M airlifter, but did not name the country.

“We are pretty optimistic that there will be a first signature of a contract for the A400M for export still this year,” Hoke told an Airbus media day in London that was webcast.

Airbus says the A400M - built by Airbus for seven NATO buyers - Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey - is finally turning the corner after years of cost overruns, technical challenges and schedule delays.

Hoke said Airbus expected to demonstrate by the end of the year the plane’s ability to refuel helicopters in mid-air, one of several features whose delivery has been delayed.

The A400M was commissioned in 2003 to give Europe an independent airlift capacity to support military and humanitarian missions, rather than relying on the Lockheed Martin (LMT.N) C-130 or the now out-of-production Boeing (BA.N) C-17.

Hoke said Airbus also expected to complete revamped delivery deals with individual buyers this year following a declaration of intent signed in February.

Airbus CEO Tom Enders said the company saw rising defense demand in Europe, where military budgets are now expanding after Russia’s annexation of the Crimea region of Ukraine, and given pressure from U.S. President Donald Trump.

“The freefall that we had ... until fairly recently has been stopped, thanks to Mr. Putin and also thanks a little bit to Mr. Trump,” he said, citing “significant” new projects both in the short and long-term.

Hoke also highlighted fresh momentum in efforts to bring together the highly fragmented European defense market, and credited French President Emmanuel Macron for helping push forward a European drone program and a Franco-German future fighter project.

Hoke said the fighter jet program would start with two lead nations, but other nations - including Spain and Britain - could be invited to join in later. The move reflected lessons learned on the A400M program, which experts say was burdened by over-ambitious wish lists from participating nations.

Europe needed to focus its efforts on one fighter project to remain competitive globally, Hoke said. “We cannot survive global competition if we fragment this market ... further,” he said.

Airbus and its long-time rival, France’s Dassault Aviation (AVMD.PA), signed an agreement to work together on the project in April, a deal that Hoke said many never expected to happen.

“It was a turning point. It showed that we can cooperate and make things happen,” he said.