South Africa cancels Airbus deal

The plane had been due to make its maiden flight in March

South Africa has cancelled a multi-billion dollar contract for eight military aircraft with Airbus, citing escalating costs and delivery delays.

The deal for the A400M planes was signed a number of years ago, when the proposed cost of the planes was significantly less.

A government spokesman said the cost was now too great given its more limited resources during the downturn.

The A400M has suffered technical problems and has been delayed.

It was due to fly for the first time in March.

New contracts

"The cost escalation would have placed an unaffordable burden on the taxpayer at a time when the national [finances] are under pressure due to the economic downturn," said South African government spokesman Themba Maseko.

He said the planes would now cost 47bn rand ($6.2bn; £3.7bn), compared with 6.4bn rand when they were ordered.

Airbus said it was "surprised" by the decision.

"We regret this all the more since it comes at a time when the programme is making major progress towards a test flight before the end of the year," it added.

The A400M received a boost this summer, when seven European countries pledged to continue supporting the troubled plane.

Ministers from Belgium, France, Germany, Luxembourg, Spain, Turkey and the UK said they hoped to agree a new contract for the plane by the end of the year.

The project was launched in 2003 as a replacement for the main Nato military transport aircraft, the US-built Lockheed Martin Hercules.