Exclusive: Germany suspends EADS helicopter purchase

By Sabine Siebold

BERLIN (BestGrowthStock) – Germany is suspending its 3 billion euro ($3.7 billion) purchase of EADS’s (EAD.PA: ) Tiger attack helicopter due to technical problems, potentially delaying delivery to its forces in Afghanistan until end-2011.

An internal ministry report obtained by Reuters on Tuesday said the step was being taken because of serious problems with the wiring of the helicopter built by EADS unit Eurocopter.

“Until the faults have been effectively and systematically rectified, the defense ministry plans to suspend the purchase of the … helicopters,” the report said.

The problems, which also cropped up with Tigers which had only had a few hours flying time, meant delivery of the first deployable helicopters would be delayed by at least seven months until November 2011, according to the report.

Germany’s order for the 80 Tiger helicopters was worth around 3 billion euros, according to previous estimates.

None of the 11 Tiger helicopters delivered so far has been suitable for operational use or training, the report added.

The Franco-German attack helicopter first flew in 2003 but its entry into service has been delayed by technical problems.

France and Germany ordered 80 Tigers each but they are being built in different versions to suit their operational needs.

France first deployed its version of the Tiger to Afghanistan last year. Germany is still waiting for the first fully combat-capable version of the type it has ordered.

Eurocopter said it was working on the wiring problems and would meantime continue to deliver helicopters for testing.

The freeze on deliveries ordered in the leaked report refers to the final version to be delivered to support combat troops.

INTENSIVE TESTS

“Corrective measures related to wiring problems have been developed, agreed by the customer and are being implemented,” a Eurocopter spokeswoman said in an e-mailed statement.

“The first two helicopters will be handed over to the German official services in June and July for intensive tests. In alignment with the customer, additional helicopter deliveries to the German Army are foreseen from the fourth quarter of 2010.”

The helicopter is needed to provide air support for German forces deployed in northern Afghanistan, where they face mounting losses due to an increase in the number of direct engagements with Taliban fighters, military sources say.

Germany’s area of operations includes difficult terrain with low visibility, where combat helicopters can deliver a clearer picture of the situation to the troops.

Currently German forces rely solely on American air support.

The fresh delay, coming two weeks ahead of the Berlin air show, is the latest in a series of setbacks for EADS.

It comes on top of delays to the A400M military transporter and the NH-90 multi-role helicopter, both of which have strained industrial relations between EADS and German defense chiefs.

Wiring was also blamed for delays to the A380 superjumbo built by Eurocopter sister company Airbus (EAD.PA: ), but company officials insist there is little comparison between the two projects. EADS has made more reliable delivery a top priority.

Besides France and Germany, the battlefield Tiger helicopter has been ordered by Spain and Australia.

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(Additional reporting by Tim Hepher; Writing by Dave Graham; Editing by Louise Heavens and David Holmes)

($1=.8208 Euro)

Exclusive: Germany suspends EADS helicopter purchase