PARIS - Airbus parent EADS looked close on Wednesday to clinching a long-awaited deal with European governments to rescue the A400M military transporter plane, boosting its shares and easing fears over 10,000 jobs.
As France and Germany piled pressure on the aerospace group to accept a package of international support to prevent a cost crisis overheating, a source familiar with the matter said EADS was ready to give broad backing after months of negotiations. An agreement in principle, lifting doubts over Europe's largest defence project, should be firmed up this week, but some of the details need to be finalised, the source said.
"It is 90 percent okay. The basics are there. It clarifies things a lot," the source said, asking not to be identified because the talks remain confidential.
A second source with knowledge of the matter said EADS and buyers were still in talks, but characterised these as a "clarification" exercise rather than continued negotiations.
Technical problems, delays and rampant overspending have pushed Europe's ambitions to develop a home-grown transporter for strategic missions more than 5 billion euros into the red.
Countries that ordered the troop plane -- Britain, France, Germany, Spain, Belgium, Luxembourg and Turkey -- have offered 3.5 billion euros in mixed forms of funding support, which is 900 million euros less than EADS had been asking for.
Germany said it expected a swift answer on the offer and that all sides were making efforts to resolve disagreements.
France said there would be no more money on the table after the new offer, which would leave EADS with A400M losses of 1.7 billion euros on top of 2.4 billion it has already written off.
"This is an important step and we have reached the end of the line," Defence Minister Herve Morin told Les Echos daily.
An EADS spokesman said the offer was still being studied.
Although EADS still faces a hefty loss on the deal, shares in the world's second-largest aerospace group rose up to 6.4 percent as concerns faded that it would have to bear the entire 5.2 billion euro loss -- or walk away at even greater cost.
The A400M heavy airlifter is designed to fill a gap between the veteran Lockheed Martin (LMT.N) C-130 Hercules and the larger jet-powered C-17 from Boeing (BA.N), but has been plagued by problems in developing its powerful turbo-prop engines.
Despite taking to the skies in a maiden test flight last December, it will not be ready for military or humanitarian missions before late 2013, four years later than scheduled.
Buyers ordered 180 planes for almost 20 billion euros in 2003, but the cost of building them is set to top 30 billion.
Talks over the dispute have dragged on for months, fuelling testy exchanges between Airbus and Germany, whose nominal share of the proposed rescue is one third, or over 1.1 billion euros.
Failure to finalise a deal could hit 10,000 production jobs.
EADS meanwhile faces pressure not just from government buyers but also from its own auditors, who are seen as increasingly reluctant to let EADS defer potentially hefty charges beyond its fourth-quarter 2009 results due on March 9.
Sources familiar with the talks said that in addition to offering a price increase equivalent to 2 billion euros, buyers were prepared to stump up guarantees of 1.5 billion euros, part of which would be repaid as royalties on future exports.
How that is packaged could determine the size of provisions since loans cannot be used to avoid charges. [ID:nLDE61F0O4]
Facing weak budgets, several nations may opt to take fewer planes rather than spending new cash to fund part of the deal.
But there were signs of last-minute squabbling among buyers as Britain fought for as much as possible of the 1.5 billion euro top-up to be reimbursable to taxpayers. One media report said Britain may opt out of the additional part of the offer.
Britain's defence ministry declined to comment.
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