Airbus had not increased A400M price when SA cancelled deal

14th April 2010 By: Keith Campbell - Creamer Media Senior Deputy Editor

South Africa was facing no increase in the price for the eight Airbus Military A400M military transport and air-to-air refuelling aircraft it had on order when it cancelled its participation in the programme late last year.

“There was not even a suggestion from Airbus that the terms of the contract with South Africa would be altered in terms of price,” Airbus Military South African spokesperson Linden Birns told Engineering News Online.

Late last year, South Africa cancelled its order for eight A400Ms “due to extensive cost escalation and the supplier’s failure to deliver the aircraft within the stipulated timeframes", in the words of the South African government’s explanation of the decision.

A few weeks before this decision was announced, then South African defence acquisition, disposals and research and development agency Armscor CEO Sipho Thomo stated that the cost to South Africa of the A400M programme had rocketed from R17-billion to R47-billion.

However, the recent deal between Airbus Military (and its parent group, EADS) and the seven European countries which form the core of the A400M programme, aimed at saving it, will see these States jointly invest a further €3,5-billion in the programme, which will see them acquiring between 170 and 180 A400Ms.

If the same deal were applied to South Africa, assuming the cost increase is the same for each and every aeroplane, it would mean that the programme would have cost this country about another €19,5-million or roughly R200-million per A400M, or something like an additional €156-million or R1,6-billion in total – a far cry from Thomo’s figure of a R30-billion increase – taking the total cost to R18,6-billion.

As the South African Air Force still needs new transport aircraft, Airbus Military has not given up on the possibility of this country changing its mind. “We still hope that South Africa will rejoin the A400M programme,” said Birns.

“We have approached the South African government to open this discussion.”

Despite the South African government’s withdrawal from the A400M, South African companies remain involved in the programme. They are the predominantly State-owned Denel Saab Aerostructures, private-sector Aerosud (both risk-sharing partners), Grintek and Omniples, with South Africa’s defence acquisition, disposals and research and development agency Armscor providing engineering services.