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Jura said:

google translation of
A400M : tension sur la ligne entre la Défense et Airbus

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Airbus faces a cash squeeze and months of uncertainty over its troubled A400M airlifter after buyer nations upheld penalty clauses for delays to Europe's largest defense project.

The Toulouse-based group has called for help on the €20 billion (U.S. $21 billion) program as it continues to encounter technical problems seven years after winning a €3.5 billion bailout from seven NATO nations.

On Thursday, Airbus CEO Tom Enders met European buyers, and a source with knowledge of the talks said nations maintained penalties but agreed to keep talking.

Airbus has hinted at a broad shopping list of demands including a better share of liabilities on the A400M's engines, whose development has faced a series of problems.

However, people familiar with the project say Airbus' campaign chiefly boils down to concerns over a shortfall in cash payments, especially from the largest customer Germany. It is not this time asking for an injection of new public funds, they added.

Insiders say Germany is withholding some 15 percent of cash payments under financial retention clauses in the contract because some A400M systems are not working as planned.

That hurts Airbus when it faces volatility in cash planning due in part to choppy commercial markets.

It also risks inflaming prickly relations between Airbus and one of its government shareholders. Berlin owns 11 percent of Airbus and is the biggest A400M buyer with 53 planes on order.

Airbus declined to comment on the talks.

Technical problems

Technical problems have put the A400M years behind schedule, with Germany's share of the costs having risen to €9.6 billion from an initial estimate of €8.1 billion.

Problems range from genuine shortfalls in its ability to wage war to apparently minor discrepancies.

In one example that some describe as splitting hairs, one of the fuel tanks is supposed to hold 64,000 liters but only holds 63,500 and has been marked as "contract not fulfilled."

But in an example of deeper issues, a defensive system for the German Air Force does not meet specifications, though Airbus insists it is still ahead of many rivals.

For now, buyers are standing their ground and forcing Airbus to provide what was agreed, though some have not ruled out short-term relief.

German Defence Minister Ursula von der Leyen has indicated she plans to make full use of clauses that allow Berlin to withhold payments. German officials say none of the eight aircraft delivered to Germany so far fully met specifications.

Germany has also asked for €39.4 million as compensation for delays on the first five aircraft.

Defense sources say the hard-nosed approach reflects a shift away from cozy relationships when arms firms would freely commit to unrealistic assignments and then strike a compromise.

Buyers, on the other hand, would order over-ambitious kit to secure extra work for their own factories. Such overreach was typically worked out in negotiations, but cash-strapped European governments are nowadays playing by tougher rules.

Analysts say the A400M was one of the first major defense projects to contain a fixed price but failed to get rid of bloated requirements, putting Airbus repeatedly on collision course with buyers over the bill for sorting out problems.

Buyers insist mismanagement inside Airbus is largely to blame for billions of euros of cost overruns.

Although all sides have agreed to meet in June, little progress is expected until German elections in September.

That echoes the pattern of previous bailout negotiations when Airbus called for a new deal in early 2009, which was also a German election year. Talks only began in earnest after that year's September polls and a final deal was struck in 2010.

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Miragedriver said:

... The deal is to be modeled on a similar lease contract signed by neighboring Czech Republic. Prague pays some 1.3 billion krona ...

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First of the 16 ordered Panzerhaubitze 2000 artillery systems delivered to Croatia

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France clears large shipbuilding industry venture with Italy
By: Tom Kington and Pierre Tran , April 7, 2017
ROME and PARIS -- The consolidation of Europe’s naval industry has taken a first, hesitant step with the approval of the purchase by Italy’s Fincantieri of a 48 percent stake in the French shipbuilder STX.

The green light from the French government for the deal will put Italy’s state-controlled builder of frigates and submarines in the driving seat at the only European yard big enough to build aircraft carriers.

Crucially, as part of the deal, the French government brought in state-owned DCNS with a shareholding reported to be some 12 percent, putting Italy and France’s top naval shipbuilders in the same corporate boardroom for the first time.

“Fincantieri and DCNS have teamed on naval programs before, but this means a more structural relationship in the running of a yard which recently built Mistral helicopter carriers, and it could be the first step towards a naval Airbus, built on an Italo-French foundation,” said Francesco Tosato, an analyst at the Centro Studi Internazionali think tank in Rome.

Acquiring the stake will not only win DCNS a seat on the board of directors but also help the French and Italian firms make joint offers on the export market, a DCNS spokesperson said.

“This will ensure the protection of France's strategic interests while strengthening our export capacity,” DCNS chairman and CEO Hervé Guillou said in a statement. The deal would help “our shared ambition to develop industrial cooperation between France and Italy in the naval sector," he added.

The deal, which was announced on Thursday by French industry minister Christophe Sirugue, will see Fincantieri take 48 percent in the yard and DCNS some 12 percent, while the French government will keep its 33.3 percent stake.

The remaining 6.6 percent will be taken by Italian investment body Fondazione CR Trieste. Promoted by Fincantieri as a blueprint for European integration, the agreement came close to being scrapped due to French public sentiment to protect jobs at the shipbuilder at Saint-Nazaire, northern France, a key base in regional politics.

Things got underway last year when STX’s then-owner, Korea’s STX, went bankrupt, leaving its controlling 66.66 percent stake in the yard up for sale. Fincantieri was named as the preferred bidder, with the French state hanging on to its 33.3 percent stake.

The prime objective of Fincantieri CEO Giuseppe Bono was to take over the healthy, €12 billion ($12.7 billion) order book for cruise ships held by the STX French unit, a sector in which Fincantieri is also thriving.

But opposition to the deal soon grew in France, with unions fearful of job losses, and politicians wary of losing votes ahead of presidential elections in just over a week.

Several presidential candidates opposed a Fincantieri acquisition, and former prime minister François Fillon, the candidate for the conservative Les Républicains, called for the yard to be nationalized.

That drew a fierce response from Claudio Costamagna, head of the Cassa Depositi e Prestiti, the state investment fund which controls Fincantieri, who called the resistance “shameful and unacceptable,” given the large number of Italian firms which have been snapped up by French buyers in recent years.

“At the end of the day, the French likely decided not to be too protectionist since it would have put an end to further French investments in Italy,” said Tosato.

The deal laid out this week by Sirugue requires Fincantieri to hold a stake below 50 percent for eight years, while pushing the Italian firm to find a smaller private shareholder “independent of Fincantieri”.

That explains the 6.6 percent share taken by Fondazione CR Trieste, which operates in the Italian northeast, close to Fincantieri’s headquarters, and was approached by Fincantieri’s Bono.

The arrangement puts the Italian shareholding bloc above 50 percent, but split between two independent companies, as requested by France.

“We are not on board to take orders from Fincantieri, we are there to support Italian industry to create a critical mass with French industry,” said a source at Fondazione CR Trieste.

The French deal gives Paris the right of veto, allowing the government to block any big cut in work for the design office or the shipyard, transfer of intellectual property rights, and any strategy that undermines the defense interests of the nation.

The government will hold those veto rights for 20 years, with a review after 12 years. Fincantieri is also committed to allowing STX to respond independently to tenders. The deal is not done yet, as the pact needs to be submitted to labor unions for mandatory consultation, as required under French labor law.

There is concern among the unions that STX could cut French jobs if the Italian parent company fell into difficulty. Labor unions are also worried about Fincantieri’s joint venture with China State Shipbuilding Corp., seen as opening the door to a transfer of sensitive French technology to the Asian partner.

DCNS and Fincantieri worked together as industrial partners and respective prime contractors on the French and Italian Horizon air defense frigate and multimission frigate. The level of joint procurement of subsystems fell sharply from the former to the latter.

But Italian finance minister Pier Carlo Padoan said he was confident the deal would be “a big success for Italian shipbuilding,” adding, “This shows that large Italian firms which have invested in being competitive and building their international credibility can take positions of leadership in sectors which are strategic for the global economy.”

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TerraN_EmpirE said:

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Jura said:

Jan 6, 2017

partly related:
France clears large shipbuilding industry venture with Italy

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