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NATO buyers near agreement to renegotiate A400M schedule: sources

SINGAPORE (Reuters) – European NATO buyers of the Airbus A400M military transporter are finalizing an agreement to negotiate a new delivery schedule and contract terms for the troubled aircraft program, sources familiar with the discussions said.

The A400M – ordered by Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey – has been hit by engine gearbox problems and delays in fitting parachuting capacity and advanced defenses.

Airbus officials presenting the aircraft at the Singapore Airshow declined to comment.

Airbus has been urging the seven nations to cap its exposure to fines and payment delays triggered by technical delays on the program. The company was keen to reach a deal before it reports earnings on Feb. 15.

Airbus last year cited “huge losses” on the project and warned of “significant risks” ahead. The program was initially valued at 20 billion euros but its cost has ballooned to well over 30 billion, sources told Reuters last year.

NATO buyers agreed in principle to revamp the delivery schedule and requirements for the plane during a meeting in London on Monday.

Airbus must still work out the exact terms and conditions with each of the individual buyers, one of the sources said.

Britain’s defense ministry was expected to announce the agreement later on Wednesday, a source said. The Ministry of Defence declined comment.

The countries acknowledged during the meeting that the program’s problems were caused in part by fresh demands imposed by the buyer nations.

OCCAR, the pan-European procurement agency, also declined comment on the outcome of Monday’s meeting.

One industry executive said the agreement would provide some relief for Airbus and its suppliers after years of mounting tension between buyer nations and the companies.

Reporting by Reuters bureaus, Editing by Tim Hepher and Clarence Fernandez

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