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Belgium says Airbus A400M talks on track

Belgium's defense minister said everything pointed to a deal on Europe's largest defense project, the delayed Airbus A400M military transport, being reached by year-end as planned.

Belgium and six other European NATO nations agreed earlier this year to renegotiate their contract with Airbus parent EADS to try to prevent delays derailing the €20 billion ($29.1 billion) project.

“I'm an optimist. So far ... all indications commit me to believe that we will be able to proceed,” Pieter De Crem told Reuters on the sidelines of a meeting of European ministers in Sweden.

European ministers are scheduled to meet in October to review progress toward an agreement.

The A400M project, which involves around 4,000 production jobs, has been hit mainly by delays in engine software development, forcing Europe's largest aerospace group EADS to take €2.4 billion in charges on its balance sheet.

Belgium has ordered seven of the planes, as well as one further aircraft in cooperation with Luxembourg. In total, 180 aircraft have been ordered with Germany the biggest buyer.

Officials have said the Airbus parent could face a hefty bill to help fill gaps in troop transport capacity, not least for British and French operations in Afghanistan, while development problems are ironed out.

“For the time being, my mindset is not one of Airbus Military already being in a position under pressure or having fines,” De Crem said. “I am still, and I think most of my colleagues, on the positive side of the table. But this cannot last for another year or more.”

De Crem also sought to dampen expectations that European buyers of the aircraft would allocate extra funds to the project beyond what has already been agreed, calling this “an illusion” as defense budgets were scaled back in the economic downturn. “At least for Belgium, that is inconceivable,” he said. (Reuters)