The much anticipated decision on the future of the A400 seems to have come and gone, overshadowed by events in Afghanistan. The partner nations have decided to proceed, perhaps through gritted teeth. Talks will now take place, concluding sometime towards the end of the year, that will seek to agree a revised set of commercial and technical terms. A dose of realism had descended on the programme, it could not continue in its existing fixed price form, EADS would have been seriously damaged, perhaps irreversibly.
With so many European jobs at stake this was never going to happen, especially in the current economic climate.
We should not lose sight of the very real fact that many of the issues have been caused by Airbus Military and EADS. A pragmatic approach must provide for some profit from the programme, perhaps even some slippage on some technical issues but these must come with some hard conditions such a fixed and revised delivery schedule that they must meet, some means of limiting excess profit (harder to achieve in practice) or even a greater share of profit on any future sales.
The implications for the partner nations with suffering air transport capabilities combined with operations in Afghanistan and elsewhere should be made abundantly plain to Airbus Military. This is not an academic issue.
The renegotiation of a fixed price contract, i.e. it is not fixed, will have serious implications for defence procurement in the medium and long term, if Airbus can so easily break the contract with a minimum of penalty the cry from others will be ‘why not us’
The negotiations must not result in a free ride for Airbus and not only have serious hard edges but be seen to have them as well.
