February 17, 2014
Credit: Airbus Military
Airbus Defense and Space's (ADS) A400M Atlas (note the company was formerly known as Airbus Military, an EADS subsidiary) has a bright future in the global export market and is expected to evolve into a profitable program, company executives assert. However, the A400M is still shrouded by multiple uncertainties tied to its stormy past. The multinational initiative, launched to create the European's successor to the Lockheed Martin C-130H and Franco-German C160 Transall, was based on an unrealistic plan and was nearly canceled due to budget overruns that exceeded even the most pessimistic predictions.
Eight participating states and the prime contractor agreed to share the financial burden linked to a fixed-price, 174-aircraft contract. Their stance now is that export sales in the longer term will take the A400M well beyond the break-even point. But this is still far from a done deal, despite the lack of head-on competition. The C-130J, an outdated concept, is significantly smaller, the big C-17 Globemaster III is being phased out, and the Brazilian KC-390, a relatively small twinjet, is in a different category. However, ADS executives emphasize that, unlike other aircraft, the A400M is both a tactical and strategic airlifter.
They point to the fact that two A400Ms have recently been delivered to the French air force; 11 additional aircraft are scheduled to enter service this year in France, the U.K. and Turkey; and production is expected to escalate to 2.5 aircraft per month. And even with all this movement, enough slots will remain available to expediently serve export customers. But such an assertion requires a reality check. Didier Vernet, head of the program's marketing unit, says as many as nine requests for information were received in the last few weeks in the wake of a French air force A400M mission to Bamako, Mali. He cites this interest as an indication that the aircraft is fulfilling its advertised mission. The aircraft carried a 22-ton payload. Vernet says one A400M performed the job of three C-130Hs and reached its African destination in an impressive 6 hr., 40 min.
However, ADS Military Aircraft Chief Executive Domingo Urena acknowledges that no list price for the A400M has been determined. This admission is an elegant way of confirming that the launch partners' multinational contract, concluded in 2003 and subsequently deeply revised, is not a usable reference. ADS would like to return to Square 1 and work on a clean sheet design but, in the absence of direct competition, it cannot quote a fly-away price—based its own in-house fragile experience and competitors' offerings. In a candid remark, Urena told me, during an interview in Seville, Spain, where the A400M's final assembly line is located: “Don't ask me to quote an [A400M] price, I don't know it.” However, program manager Cedric Gautier says he hopes to conclude its first export order by the end of the year.
This is an unprecedented situation, a major manufacturer promoting a next-generation airlifter, now in full production, without being able to quote a list price. It is yet another way of saying the A400M is still recovering from its chaotic and costly beginnings. Recently, Airbus Group Chief Executive Tom Enders noted that the program still is a financial liability. But Vernet points out that an estimated 1,850 of the military airlifters currently in service around the world are 30 years old and must be replaced within this decade and early into the next. ADS's objective is to secure export orders for about 400 A400Ms, thereby extending the production run enough to achieve profitability. But company executives refrain from elaborating on financial targets.
In the same vein, ADS executives remain mum about a long-harbored hope to convince the Pentagon that an Americanized A400M could be the right aircraft to succeed the C-130. Remembering the U.S. Air Force tanker controversy and the ensuing cacophonous political rhetoric about economic patriotism, this is certainly not the right moment to initiate such a delicate discussion. Moreover, to strengthen its U.S. goals, ADS should first conclude a far-reaching business agreement with a major U.S. partner—an extremely complex and risky prerequisite.
In other words, the reborn A400M can be expected to remain in the news for decades to come, trailing turbulence in its wake.
Former Paris Bureau Chief Pierre Sparaco has covered aviation and aerospace since the 1960s.