Airbus threatened to scrap the overdue and overbudget A400M military transport just weeks after its maiden flight, putting more pressure on seven European governments to give it better financial terms for the troubled project.

Analysts said the threat was aimed at forcing goverments to move ahead with a project that supports 40,000 jobs but is three years overdue and over budget. Actually cancelling would be highly unappetizing at a time of high unemployment across Europe, and alternative planes don't meet the requirements set out for the A400M.

EADS, Airbus´ parent, hopes governments will either pay more for the planes or reduce the number of planes on order. Other options include reducing the specifications, or spreading increased payments out over time.

The customer governments have agreed to re-negotiate the original fixed-price contract. But competing military interests and tight budgets mean they have so far failed to find a compromise.

Airbus spokesman Stefan Schaffrath said that ending the program “is a scenario” if the military plane project “continues to contribute to a loss.”

“We are suffering from a stagnation, he said. “The loss-making is serious. This needs to be urgently resolved.”

Gareth Jennings, Jane´s Defence Weekly´s senior aviation analyst, said cancellation was unlikely. “There is too much resting on the program for the European aerospace industry in terms of job, prestige, and future capability,” he said.

It suits cash-strapped governments to defer delivery — and thus payment — for a few years and while some air forces have expressed an interest in buying Lockheed or Boeing alternatives, governments have not, he said.

The U.S.-built Lockheed Martin C-130J Hercules carries only half the payload of the A400M, and Boeing´s much more expensive C-17 Globemaster III is considered too large and lacks the tactical versatility of the Airbus design.

via Airbus Threatens to Drop A400M Military Plane – ABC News.