Business

EADS eyes US in A400M plane deals

A400M
Image caption The A400M is over-budget and behind schedule

The troubled Airbus A400M military transport plane is expected to land orders from the US military, according to Louis Gallois, chief executive of Airbus' parent company EADS.

"The Americans are interested," he told BBC News. "They do not have an aircraft with the same capabilities."

Mr Gallois said he did not expect the US to order the plane immediately.

However, by the middle of the decade the US will need to replace their existing planes, he explained.

By then the A400M programme - which is several billion euros over budget and four years late - should be running smoothly.

"The programme is now on schedule," Mr Gallois said.

Still committed

Seven European governments have each ordered dozens of the A400M aircraft in order to support the project.

In March this year, the seven agreed to inject 1.5bn euros (£1.3bn) in additional funding.

Ahead of the Farnborough air show, there were hints that some European customers were considering walking away from their commitments or reduce their orders, though Mr Gallois said he had not been told of any such plans.

"It is a contract we have with European nations," he said.

"But to become profitable we have to export it."

Tight budgets

Image caption Mr Gallois is confident of landing orders from the US military for the A400M

Landing military contracts has become much tougher in recent months, however, with both the US and European governments cutting spending wherever they can.

Nevertheless, global military spending remains at a historically high level, having risen 50% since 2000, according to Stockholm International Peace Research Institute (Sipri).

The US increased military spending by 63% between 2000 and 2009, Sipri found.

EADS is eager to grow its share of the US pie, gunning for revenues of $10bn (£6.5bn) in the US, up from $1.2bn currently.

Tanker contract

A contract central to this strategy is currently up for grabs.

After years of wrangling, EADS and Boeing have both just put in their latest bids to build an aerial refuelling tanker for US fighter jets.

"I think we have a good chance to win this," Mr Gallois said, insisting that its plane was not only the best, it had also been developed already and hence all the development risks had been absorbed by others.

He also vowed to compete aggressively on price, though stressed that although the $35bn contract was attractive and could be worth even more over time, it was not essential to its US strategy.

"We are not ready to lose money to win this contract," he said.

Boeing is equally optimistic.

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