EADS CEO Gallois (l.) in front of his "heavy loss-maker" (Pic: EADS)

10:26 GMT, September 21, 2008 German weekly 'Der Spiegel' exclusively reported that EADS and its subsidiary Military Airbus have threatened to stop the production of its A400M military transport aircraft if clients do not drop penalty clauses for late delivery.

Der Spiegel weekly cited a letter sent by Louis Gallois, CEO of EADS, to all seven governments (Germany, France, Spain, Belgium, Luxembourg, Turkey and the UK) who have ordered this aircraft.

In the letter, Gallois is quoted as saying the military carrier is already "a heavy loss-maker" which is creating "considerable difficulties" at the European Aeronautic & Defence company.

The "anticipated profits" from 180 orders on Airbus' books have already been "invested" and additional €1,4 billion (US$2 billion) have been allocated, Gallois said in the letter and the whole programme may become "unbearable" for the company if those countries that have ordered the plane do not abstain from claiming damages for the delays, the magazine reported.

However, Germany's ministry of defence would be "standing firm," the magazine saying Berlin holds that "financial concessions" should only be discussed upon receipt of the planes. EADS declined to comment.

Experts of the German Bundeswehr are expecting the delivery of the first out of 60 aircraft in 2012 - two years late.

The development costs of one of the biggest ongoing defence projects in Europe are estimated at €20 billion (US$29 billion).

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