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EADS, fearing exports will be poached, offers to help core buyers

Logo of EADS is seen at the European aerospace and defence group EADS headquarters in Les Mureaux near Paris January 12, 2011. REUTERS/Charl
Logo of EADS is seen at the European aerospace and defence group EADS headquarters in Les Mureaux near Paris January 12, 2011. REUTERS/Charl

By Brenda Goh

SEVILLE, Spain (Reuters) - Europe's Airbus pledged on Monday to help address financial difficulties faced by core European buyers of its A400M airlifter, as it tries to prevent some of the countries poaching its own exports by reselling aircraft they cannot afford.

The comments from the head of Europe's aerospace giant came as France predicted a buoyant export market for the long-awaited troop and cargo carrier, which was formally inaugurated in a rain-soaked ceremony in southern Spain on Monday.

"We are well aware that our customers face economic difficulties and we are grateful for their steadfast commitments to the A400M," said Tom Enders, head of Airbus's parent, EADS .

"We will continue to work with our customers to find solutions that are mutually acceptable and ensure the future success of this great aircraft," he said, without going into detail.

After a tortuous 30 years in development, the first of 170 troop and cargo planes jointly ordered by Britain, France, Germany, Spain, Belgium, Luxembourg and Turkey are a step towards self-sufficiency in military transport for Europe.

France, Germany and Spain all have major stakes in EADS.

Watched by Spain's Crown Prince Felipe and politicians and military brass from purchasing nations, the bulky turbo-prop was paraded in a lavish ceremony at its Seville assembly plant.

Airbus has launched a campaign to export 300-400 A400Ms over the next 30 years, in addition to the 170 it already has under order from Europe. Malaysia, which has ordered four aircraft, is its only export customer so far.

"I can't give you any figures but there is huge capacity for exports, the political and industrial winds are synchronized," French Defence Minister Jean-Yves Le Drian told reporters.

Airbus is worried that Europe's largest joint defence project could be its last for years to come because of spending cuts and splits over foreign and security policy.

RE-SELLING WORRIES

It has also expressed concerns about plans by some of the plane's European customers to sell on some of the A400Ms they have ordered to buyers outside the region, frustrating Airbus's hopes of producing extra planes for export.

Analysts say Germany, Spain and most probably France want to jump in front of Airbus and re-export some of their A400M allocations to boost state budgets.

That would delay the point at which Airbus could start building more aircraft for export, but also defer the payment of export royalties to reimburse a 3.5 billion euro bailout provided by buyers in 2010 as the plane went far over budget.

According to two people familiar with the 2010 bailout plan, the first 174 planes (including Malaysia's four) are excluded from the royalty agreement.

Enders told Reuters it was too early to say who the potential buyers were. Airbus executives say they have already visited over 20 countries, many of them in the Middle East, South America and Asia.

The A400M was conceived in the 1980s to meet a looming shortfall in military transport capacity, but the 20 billion euro project went more than 5 billion euros over budget.

Enders said Europe's political and defence industry leaders must be far more realistic with schedules and funding for future military programs.

The plane competes against Lockheed Martin's C-130 Hercules turboprop and the larger Boeing C-17 cargo jet. Production of the latter aircraft was recently halted, lifting hopes for the A400M.

The first A400M was delivered to France on August 1, and Enders said there would be further deliveries to Turkey and France in the coming weeks.

"This is the right aircraft for many air forces around the world. And certainly, when you introduce the first aircraft with the first real customer, an air force, then it's far more convincing for export campaigns than if you're still in the development stage," Enders said.

(Additional reporting by Tim Hepher in Paris and Adrian Croft in Brussels; Editing by Kevin Liffey)

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