A400M - Come Back When You're Serious

Indeed, recent talks with senior MoD officials suggest that the outlook is bleaker than ever. The officials told Defence Analysis that A400M - and especially Germany's position - was the hottest potato on Defence Procurement Minister Baroness Symons' desk. While there has been satisfaction that money has been squeezed out of the Treasury, and a pretty firm commitment from France of the order of FFr 15-billion (£1.35-billion), questions are being asked of Berlin. But no real answers are coming back.

The situation has worsened since early November. The draft budget for 2001 - on which the Defence White Paper will be based - has a blank line where A400M funding details should appear. This suggests that although the project is an aspiration, no money will be found in 2001 for the programme. At the very least, Berlin would need to find an ante of DM 100-million (£32-million), although sources say that on a "commercial" basis, more like DM3-500-million is needed. Whatever, the cash isn't in the budget.

Further, Bundestag sources say that if cash is not included for 2001, then there will also be none for 2002, just prior to the next election. And what happens after any election? Even if there is no change of government, there is always at least a six-month moratorium on any Defence spending. All this adds up to a likelihood that Berlin will not commit to the A400M until late 2002 or early 2003. On that basis, the aircraft - even if it has a trouble-free development programme - will not meet the UK's notional 2007 delivery date for a 2008 ISD.

The UK is as worried about Berlin's attitude to how it wishes to fund A400M. The German view - no doubt stemming from the laughably small budget - is that they do not wish to pay anything until actual deliveries. But, naturlich, they want the workshare that 73 aircraft will give - 32 per cent give or take. Defence Analysis has received signals that even in Germano-friendly France, this attitude is not viewed well either. France, Italy, Spain, and the UK understand that even on commercial terms, there are staged progress payments required, even if these will - ought to be - less than paying up-front as with a military programme.

Statements coming from the Bundestag are also not optimistic insofar as German funding is concerned. As a Bundestag defence specialist stated: "The British and French need their transport aircraft earlier than Germany. We want ours in the second half of the next decade (Editor's italics)". Huh? Hang on a minute - the second half of next decade? So Germany would only want deliveries after 2015? To quote the fiery tennis player, John MacEnroe "You cannot be serious."

On the basis of no German funding until 2003, and an uncertain German budget profile between 2003 until 2012, does A400M not look quite fragile? Certainly. Now, in the "Good Old Days", a deal would have been worked out, whereby the other partners would take the strain to help out good old Germany. But would anyone like to say where this help could be found in already herniated budgets? And after being stung on NH90 and Tiger, will Paris wish to bend over backwards again ?

Meanwhile, adding to the can of worms, as the UK's Chief of Defence Procurement, Sir Robert Walmsley has openly stated, Germany refuses to place its A400M work rights within an OCCAR framework, because it wishes to preserve its workshare position.

The spotlight is arguably starting to swing back towards the UK. In early summer, it was Britain that broke the A400M logjam by "committing" itself to the project, and showing that it was willing to put up hard cash. However - and missed by many - the statement by UK's Defence Minister Geoff Hoon [pictured centre, front rank] was heavily caveat-ed.

His "commitment" was subject to a suitable contractual framework being created; a realistic programme; acceptable prices; and a guaranteed ISD to suit the UK - 2007 in this case. He added, "If Airbus cannot offer us and our partners an affordable and manageable programme....we will be able to meet our military requirement and protect taxpayers' interests by purchasing a fleet of Boeing C-17s as an alternative."

Now, Defence Analysis has been concerned over the intervening months that the essential character of this policy statement was becoming erroneously undermined, that the UK had decided to so wed itself to the A400M that it was going to cut off all of its negotiating options. While MoD talk about A400M has risen, that about C-17 has fallen. But with the present German position, it is almost certainly time to think again about the fallback position of buying more C-17s.

To be fair, exactly how crucial is the UK's 2007 ISD? Well, ISDs come, and ISDs (more often) go. What is essential today becomes merely desirable tomorrow. Can the UK put up with a couple of years' delay in getting A400M underway, with a 2009/2010 delivery date? Probably. As much to the point is that this would take A400M out of the 2003-06 peak spend wave, so heavily affected by Eurofighter Typhoon and Type 45, so a delay might not be such a bad thing.

But can one have real confidence in a programme where a senior partner is acting petulantly, demanding that all the rules are changed to suit it even if this means that the intention to contract under commercial rules is dropped? No. When Defence Secretary Hoon set out his terms, Defence Analysis took him at his word - he now needs to live up to it. If contracting troubles continue with A400M, the time will have come to say "A plague on both your houses", and to hop on a plane to Long Beach.

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