First Flt Of EADS' A400M Transporter Postponed


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Mar 3, 2006
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First flight of EADS' A400M transporter postponed

By GREG KELLER, AP Business Writer

Thursday, September 25, 2008

(09-25) 08:53 PDT PARIS, France (AP) --

EADS, the parent company of planemaker Airbus, said Thursday it has indefinitely postponed the first flight of its A400M military transport plane because its engines are not ready.

In a statement, the European aerospace company said that despite the delay, "the 2008 guidance of the group is not changed at this point."

The A400M, which EADS describes as Europe's most ambitious military procurement program ever, was to have made its first test flight in Seville, Spain, before the end of this year.

The A400M's engines are being made by EPI Europrop International GmbH, a consortium made up of Industria de Turbo Propulsores, or ITP, of Spain, MTU Aeroengines of Germany, Rolls-Royce from Britain and Snecma Moteurs of France. An EPI spokeswoman did not immediately return calls seeking comment.

EADS said the first flight depends on results of testing on the A400M's flying test bed, which it said should start in the coming weeks. The test bed is a C-130 aircraft mounted with the A400M's engine and propeller.

EADS said it would assess "the financial, technical and schedule implications" of the delay after the test bed flights and further discussions with customers.

The new delay "is clearly negative" and increases the likelihood that EADS will have to cut its earnings guidance, Oppenheim Research analyst Winfried Becker said.

EADS is forecasting earnings before interest and taxes of 1.8 billion euros ($2.64 billion) this year, on sales of more than 40 billion euros ($58.8 billion).

Last year the company's earnings before interest and taxes was 52 million euros on sales of 39 billion euros. Earnings were hurt by the weak dollar and charges for the A400M delay, as well as restructuring charges and costs for redesigning its A350 midsize jet.

EADS' largest operating unit, Airbus, sells aircraft in dollars and reports its earnings in euros, so when the dollar declines against the euro, EADS' earnings decrease.

Some analysts were already expecting a new hit to earnings after EADS Chief Executive Louis Gallois warned in July of possible further delays to the A400M project, saying the group had "decided to stay on the conservative side" when making its full-year earnings forecast "because of our past track record."

Launched in 2003 with an order for 180 planes from seven European governments — Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey — the 20 billion euro ($29.4 billion) A400M transporter program was originally scheduled to begin final assembly of the first models in April 2007.

Last November Airbus announced a delay that could cost as much as 1.4 billion euros ($2.1 billion) in penalties and other charges.

Its first flight was once penciled in for January 2008, and the turboprop plane was supposed to enter into service with the French Air Force in the second half of 2009. Later, the first test flight of the plane was scheduled for September or October this year, with the first planes delivered in mid to late 2010.

The hulking, gray aircraft with a black nose and four black propellers with curved blades is designed to replace Lockheed Martin Corp.'s aging C-130 Hercules cargo aircraft used by the U.S. Air Force as well as the retired C-160 Transall transport aircraft developed by a French and German consortium.