South Africa has had enough of the delays and cost overuns in the Airbus A400M military transport aircraft and has cancelled its €3.5 billion ($5.2 billion) order for eight of the planes.
Airbus said that it "very much regrets" the South African government's decision, the first cancellation for the program that is already running more than three years late and is incurring billions of euros in extra costs for Airbus's parent company, EADS.
South Africa ordered the planes in 2005 to replace its aging fleet of C-130 Hercules. The estimated cost of the order at that time was €837 million. Airbus says the cancellation "came totally out of the blue," particularly as officials familiar with the situation said the South African government had given no indication that it was thinking about cancelling its contract. Perhaps Airbus officials had not paid sufficient attention to South African media stories which were reporting mounting unhappiness with the program. The weekly Sunday Times wrote on Oct. 31 that “some members of President Jacob Zuma's cabinet are mounting a last-ditch attempt to torpedo” the projected purchase “questioning how government can justify the expenditure, given the shortfall in the budget.”
What is not clear for the moment is how the cancellation will affect work share which had been allocated South African companies to supply parts for all the A400Ms, not just the South African ones.
South African government spokesman Themba Maseko said South Africa wouldn't incur any penalties for cancelling its order because the delivery deadlines stipulated in the contract had not been met, and added that Airbus will have to reimburse advance payments it received of 2.9 billion rand (about $380 million). The deal would have placed an “unbearable burden” on taxpayers, Maseko said. “The termination is due to extensive cost escalation and the suppliers' failure to deliver the aircraft within the stipulated timeframe.”