EADS and Airbus have welcomed the conclusion of negotiations with the European intergovernmental organisation OCCAR and the seven A400M launch customer nations.
The agreement, finalised 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.
In the principle agreement, Customer nations and EADS agreed 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.
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, led to an increase of the A400M loss provision of €1.8 billion pre tax for the full year 2009.
The update of the provision was based on a management assessment taking into consideration the principle agreement between EADS and the seven Nations.
EADS earnings before tax (EBIT) and net income were negative in 2009 after incorporating this charge.
While the overall economics of the March agreement remain unchanged, the government payments are now more back-loaded than previously expected.
Negotiations on the export levy facility (ELF) scheme are expected to be finalised before the end of 2010.
“The A400M flight test program is making excellent progress and demonstrates the soundness of the product,” Domingo Ureña, Managing Director of Airbus Military, said.
“We are very proud of the achievements so far and are now moving towards the series production by the end of the year.”