AP

WILL Europe's biggest defence-procurement programme, the Airbus A400M military transport, crash and burn before the aircraft has even flown? The A400M is three years late and €2 billion ($2.7 billion) over budget. Talks to decide its fate are about to begin. They will be a game of high stakes played by OCCAR (the organisation founded 12 years ago to manage collaborative military projects on behalf of member governments), the four countries who have collectively placed 84% of the 192 orders for the giant plane, and EADS, the parent company of Airbus, which is struggling to build it.

If agreement cannot be reached on how to continue with the €20 billion programme, EADS will have to return as much as €5.7 billion in advance payments—more than half the defence group's net cash. It would be a humiliating admission of defeat both for Europe's defence industry and for the sponsoring governments, which would have to turn to America for a replacement aircraft.

The trigger for the showdown is the failure of Airbus to meet a commitment to have flown the A400M by the end of March. Under the terms of a contract signed in 2003, this gives customers the right to cancel their orders. Rather than do so at once, the governments involved have agreed to a three-month moratorium during which time an attempt will be made to salvage the project.

Most observers believe a fudge of some kind will be found to keep the A400M alive. Louis Gallois, the chief executive of EADS, says that not only do European defence ministries need a plane with a unique combination of capabilities, but the jobs of up to 40,000 highly skilled workers are at stake. However, a recent report from the French Senate suggested that the plane could end up being four years late. The Germans sound increasingly cool about the project. And the French and the British, who are desperate for additional heavy-lift capacity to support their operations in Afghanistan, are busy looking for ways to bridge the gap.

One (far from ideal) solution would be to buy or lease a combination of Boeing's C-17—a much bigger military transport that is now only slightly more expensive than the A400M—and an updated version of Lockheed Martin's venerable C-130. Were that to happen, orders for the A400M might be cut, leading to an even higher unit price for remaining aircraft.

As for EADS, Mr Gallois's soothing words are in stark contrast to recent comments by Tom Enders, Airbus's German chief executive. Mr Enders regards the fixed-price contract negotiated by one of his predecessors, Noël Forgeard, as a disaster rooted in naivety, excessive enthusiasm and arrogance. “If you had offered it to an American defence contractor like Northrop, they would have run a mile from it,” he says. Mr Enders believes that unless the contract can be substantially renegotiated, the project should be abandoned and, however financially painful it might be, Airbus should return the money to its customers. In an interview with Der Spiegel two weeks ago, he said: “Better an end with horror than horror without end.”

There are a number of reasons why the A400M contract has proved such a disaster for Airbus. One is that the firm, which had no previous experience of big military programmes, grossly underestimated the complexity of the aircraft that it was being asked to build. The view within Airbus was that the A400M was little more than a “flying truck”. But the A400M is one of the most technically difficult aircraft projects ever undertaken.

Somewhere between a C-130 and C-17 in size and payload, the A400M is designed to have the smaller plane's ability to fly very slowly and land on unprepared airstrips close to the battlefield, yet come close to the speed of the jet-engined C-17 and exceed its range. To pull this off, the A400M needs extremely sophisticated software to manage its propulsion systems—three times as complex as the software needed for the engines of the A380 superjumbo, according to EADS—and turboprop engines of a size and power never before produced in the West.

Just in case that was not hard enough, Airbus allowed its customers to bully it into rejecting a bid to supply engines from Pratt & Whitney, a vastly experienced American firm. Airbus plumped instead for a politically-inspired consortium that included France's Snecma, Britain's Rolls-Royce, Germany's MTU and Spain's ITP. Still worse, Airbus took the highly unusual step of accepting full contractual responsibility for the delivery of the propulsion-management software, known as FADEC, even though it had little or no control over its development.

Fasten your seatbelts

The TP400-D6 engine has at least now flown, albeit on a C-130 testbed, but the software is still months from delivery and the A400M's first flight is not expected until next year. Even then there are doubts whether the aircraft will meet all its performance goals. In particular, there are fears that early versions may be too heavy to carry more than 30 tonnes of payload over long distances. That would rule out lifting Germany's 31.5-tonne Puma armoured fighting vehicle for more than short hops.

Despite all these problems, most of those involved with the A400M are still betting that it will survive: too many people have too much riding on it and no other aircraft is as flexible. If it does take to the air, the plane will have a breadth of talent that nothing else matches. But such is the frustration and anger on all sides that a different outcome is more than possible. The Americans are watching closely.