The A400M military transport plane that has been causing Airbus and European defense ministers budgetary and logistical headaches finally took to the skies for its maiden flight on Friday.
But even as the hulking, gray airlifter took off from the Spanish city of Seville, defense officials were to meet on the ground to decide how to continue with the much delayed and over budget project.
The A400M program was launched six years ago with an order for 180 planes from seven governments — Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey. The project is running at least three years late.
The original price was €20 billion ($29.46 billion), but a preliminary report by auditors PricewaterhouseCoopers said EADS might need an extra €5 billion — inflating the final bill by 25 percent, a person familiar with the talks said on condition of anonymity, as he is not authorized to speak to reporters.
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EADS has asked governments to renegotiate the initial contract, which was agreed along the lines of Airbus' standard fixed price commercial contracts, rather than a risk-sharing military deal.
Airbus CEO Tom Enders has slammed the contract agreed by his predecessor, which saddles the European planemaker with most of the costs of delays.
But asking governments to pay more has become difficult at a time when countries' budgets have ballooned as they fight off the worst of the economic crisis.
As well as raising the price, officials could agree to cut the number of planes on order, reduce the specifications, or spread increased payments out over time.
Officials meeting in Seville will try to overcome a deadlock between countries such as France and Britain, whose militaries need the aircraft urgently, and other countries, such as Germany, that have budget concerns.
Ministers are hoping to agree in principle to continue with the project before the end of the year, possibly at a meeting next week, according to the person familiar with the talks. But the tricky details probably won't be pinned down until the contract signing in late March or early April, the person said.
As well as price, governments need to decide on technical specifications and delivery schedule.
Abandoning the project would cost EADS €5.7 billion ($8.4 billion) in advance payments it would have to return to governments — and would dent its credibility. It has already has put aside €2.4 billion in provisions against losses related to the plane.
The A400M is designed to replace Lockheed Martin Corp.'s aging C-130 Hercules cargo aircraft used by the U.S. Air Force as well as the retired C-160 Transall transport aircraft developed by a French and German consortium.
It should almost double its predecessors' cargo capacity and have a range of up to 4,000 miles (6,400 kilometers).
South Africa recently pulled out of an order for eight A400Ms, leaving Malaysia as the only export customer.