UPDATE 1-Germany denies state guarantees report over A400M

(Adds more background, detail)

BERLIN, Feb 11 (BestGrowthStock) – Germany’s defence ministry on
Thursday denied a report it planned to finance nearly 1 billion
euros ($1.4 billion) of cost overruns for the Airbus A400M
military transporter plane by tapping a state aid pool.

Meanwhile, the European planemaker Airbus said it would
start trimming its exposure to the troubled A400M military
transporter programme if “intensive” funding talks failed to
make tangible progress within days. [ID:nLDE61A0V2]

“The report has been plucked out of thin air,” a spokesman
for the ministry said. “The figures cited neither reflect the
internal status of negotiations, nor has any kind of decision on
the financing been made.”

Citing defence ministry sources, Handelsblatt paper said the
plan was to use guarantees from the Deutschland Fund state aid
pool and loans from the KfW state development bank to help cover
a funding shortfall at the EADS (EAD.PA: ) project.

After projected cost savings, the loss is estimated at 7.6
billion euros on the project.

EADS has asked buyers to share the losses to prevent damage
to Europe’s airliner business and safeguard 10,000 A400M jobs.

The company has offered to cover 3.2 billion euros of the
projected losses and wants governments to pay the remaining 4.4
billion, but nations have instead offered 2 billion.

Handelsblatt said the state aid plan was pushed by Defence
Minister Karl-Theodor zu Guttenberg, and foresaw EADS repaying
the money once the A400M hit certain unit sales targets.

The paper added that finance ministry officials were working
on conditions to attach to the funding package, and that
negotiations between the buyer nations for the delayed aircraft
and Airbus parent EADS were continuing on Thursday.

However, the German defence ministry spokesman said no
negotiations were taking place on Thursday or Friday between the
two sides.

The paper also said junior defence minister Ruediger Wolf
had been relieved of responsibility for armaments “with
immediate effect”, which the ministry denied.

“Wolf will lead the negotiations over the A400M until they
are concluded,” the spokesman said.

A keenly awaited deal on the future of the troubled A400M
project could be reached this week or next, France’s top arms
procurement official said on Monday. [ID:nLDE6160O4]

Investment Basics

(Reporting by Dave Graham and Michael Shields; Editing by
Sharon Lindores)
($1 = 0.7251 euro)

UPDATE 1-Germany denies state guarantees report over A400M