U.K. Airbus A400M Airlifter Costs Exceed Plan by $1.2 Billion

The Airbus Military A400M airlifter for the U.K. is now running over budget by 770 million pounds ($1.2 billion), according to the British Ministry of Defence.

There is also a cost overrun on a Thales SA (HO) Watchkeeper drone program and a Northrop Grumman Corp. (NOC) electronic system for aircraft, Philip Dunne, a minister for defense, told Parliament in written answers to questions.

The U.K. is acquiring 22 A400M transports to replace Lockheed Martin Corp. (LMT) C-130s, a program running 73 months behind plan, the National Audit Office said. The airlifter is scheduled to enter service with the Royal Air Force in 2015. Lead customer France should get its first plane by the middle of this year.

“Project performance can be affected by a number of reasons, not all of which are in the contractor’s control,” Dunne said. The increases are against the ministry’s total cost baseline, and not contracts with the companies, he said.

Airbus SAS and countries funding the development of the A400M restructured the program in 2010 to address cost increases and schedule delays. The U.K. trimmed its purchase to 22 units instead of 25 as part of the review.

The Watchkeeper unmanned aircraft program for the army is 57 million pounds above estimate and Northrop Grumman’s aircraft identification beacon is 6 million pounds above projections, Dunne said.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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