An Airbus A400M aircraft lands in the Seville airport, Spain, on Tuesday, May 12, 2015. Spain has withdrawn flying permission for Airbus A400M planes in production. Photo: AP.
An Airbus A400M aircraft lands in the Seville airport, Spain, on Tuesday, May 12, 2015. Spain has withdrawn flying permission for Airbus A400M planes in production. Photo: AP.
As Europe's most expensive defence program, the Airbus Group's A400M military transport aircraft has one major advantage keeping it going: it's too big to fail.
A fatal crash near the A400M plant in Seville last weekend has plunged a program already plagued by cost overruns and delays back into crisis.Spain on Tuesday ordered its grounding pending an investigation, bringing the possibility of fresh delivery delays and costly design changes. Armed forces across Europe have suspended flights of their existing A400Ms.
The huge expense already committed to the project by Airbus and the governments that have ordered it - 25 billion euros ($28 billion) or a quarter more than planned - may ultimately be what saves it from termination. While Airbus has called the A400M program "Mission Impossible" in the past and threatened to pull out, militaries from Britain to France and Germany are keen to get their hands on a modern transport plane that serves multiple roles and replaces their aging equipment.
"This will create headwinds for earnings coupled with embarrassment for the company, but everyone involved is so far down the line that I can't see the program being killed," said Richard Aboulafia, vice president of Teal Group, an aviation advisory firm based in Fairfax, Virginia.
The first A400M was handed over to France in 2013, a decade after the program was begun and four years later than planned after a spate of delays from glitches including engine-control software malfunctions. Even before Saturday's crash, which killed four, Airbus warned of new cost issues from problems integrating military capability and ramping up output.
A400Ms fresh off the production line are now barred from entering pre-handover testing until it's clear what caused the crash involving a plane making its first flight after leaving the plant, Spanish Defense Minister Pedro Morenes said Tuesday.
Airbus said in a statement that the Spanish move is "a precautionary measure," adding: "To what extent this will have an impact on the delivery schedule is too early to say."
The A400M has won one export customer, Malaysia, since seven European nations established the project to replace models several decades old. South Africa previously also ordered the model, only to cancel its purchase agreement again.
At the very least the crash close to Airbus Military's Seville factory seems likely to affect the company's ability to deliver the dozen aircraft due to be handed over in the rest of the year. At worst, it may deter new buyers and impact the backlog of 162 planes, with Germany and Britain among clients that have already shrunk their order books in response to earlier production issues and tighter defence budgets.
While the loss of an aircraft making its first flight since coming off the production line before delivery to Turkey in June is so far unexplained, a report in Germany's Der Spiegel suggested it came down after multiple engine failure.
The A400M's serial delays have been focused largely on its giant turbo-propeller-powered engines and the functioning of a software interface between them and the plane known as Fadec, for fully-authorized, digital engine control. The interface malfunctioned during the A400M's maiden flight in 2009.
Engine producer Europrop International, which includes Rolls-Royce Holdings, Safran of France and Germany's MTU Aero Engines, has declined to comment on the crash, while Airbus has said only that it's investigating the circumstances of the disaster and sent a special team to the scene.
The Spanish defence ministry's grounding of new A400Ms suggests the crash probe may be led by military authorities rather than dealt with as a civil matter, though the crashed aircraft's flight-data and voice recorders may still be examined by air-accident experts in France, Britain or Germany.
An Airbus A400M aircraft lands in the Seville airport, Spain, on Tuesday, May 12, 2015. Spain has withdrawn flying permission for Airbus A400M planes in production. Photo: AP.
"Until the result of the investigation is known, it's not appropriate that planes that are about to do tests can fly," Morenes said in an interview with Onda Cero radio.
Airbus's own fleet of three A400Ms used for trials to expand the model's operational envelope should escape the ban, allowing the company to carry on adding military capabilities that will have to be retrofitted to planes already delivered.
One of the planes flew from Airbus's Toulouse base in France to Seville today in the first operation since the crash.
Britain's Royal Air Force, with two A400Ms, and Germany's Luftwaffe, which has one, have meanwhile paused operations pending findings on the crash. France, with six, will only permit "priority flights" in operations already under way.
It's not clear whether the next two planes scheduled for delivery - to France and Britain - will escape Tuesday's ban. Both have already flown, though two or three flights are typically required before acceptance by the end user.
Responsibility for tackling the latest A400M crisis falls to Fernando Alonso, a three-decade Airbus veteran who was named head of the military arm Jan. 29, taking over on March 1, after previously heading up flight-test operations. Alonso boarded today's A400M flight in a show of confidence in the plane.
While Airbus Chief Executive Officer Tom Enders once threated to scrap the A400M, saying it was sapping money and engineers on a scale that put the entire company at risk, without a further spiraling in costs European governments are likely to want to see the project through.
The A400M fits in between Lockheed Martin's aging C-130 Hercules model and the larger Boeing C-17 Globemaster and satisfies an acute requirement that spans the airlift of military hardware through troop transport to disaster relief.
Airbus has said its plane handles short, poorly prepared runways better than the C-17 and can carry bulkier cargo than Lockheed's rival.
