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Friday, 23 November, 2001, 15:48 GMT
Key military plane gets go-ahead
Airbus A400M mock-up
A400M will be used to deploy Europe's rapid reaction force
Germany and France have confirmed they will sign a $16bn contract for the Airbus A400M military transport plane by the end of the year.

"France and Germany underline the importance of the A400M military transport plane for the European defence industry," the Franco-German Defence and Security Council said in a statement.

Doubts surfaced that the project may not get off the ground after Germany, which has placed the biggest order, suggested on Tuesday it might not meet its obligation to buy 73 planes.

Commissioning the A400M received a boost in 1999 when the North Atlantic Treaty Organisation's (Nato) military action against Yugoslavia highlighted European dependence on US airlift capacity for deploying troops and equipment.

Acquiring the planes forms a key part of the European Union's planned 'rapid reaction force'.

German dithering

France and Germany - along with Spain, Britain, Turkey, Belgium, Portugal and Luxemburg - have ordered a total of 196 A400M aircraft.

The Italian government has "set aside" its participation in the Airbus A400M military project for the time being.

The contract for the A400M was first scheduled to be signed in September but has been repeatedly put off due to Germany reservations.

Before the announcement, shares in the European aerospace company EADS (European Aeronautic, Defence and Space Co), which holds an 80% stake in Airbus, fell by 5.9% after a executive said the A400M would not be built if Germany committed to buying only 46.

"The A400M will be built even if the Italians don't order any, but not if the Germans take only 46," EADS co-chief executive Philippe Camus told French daily Les Echos.

EADS was formed last year through the merger of the leading aerospace firms from Germany, France and Spain.

It hopes to boost defence profits to offset falling demand in its commercial plane unit.

See also:

20 Sep 01 | Business
Airbus freezes expansion plans
09 Aug 01 | Business
EADS and Airbus sales rocket
19 Jun 01 | Business
Boeing bows to Airbus
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