Airbus wrangles with Turkey over military transport plane

Airbus wrangles with Turkey over military transport plane

TOULOUSE - Reuters
Airbus wrangles with Turkey over military transport plane

Tom Enders, Chief Executive Officer of Airbus Group, attends the Airbus Group 2013 annual results presentation in Toulouse February 26, 2014. REUTERS Photo

Economic uncertainty in Turkey is causing a headache for aerospace and defence group Airbus, which is still haggling over an A400M military transport plane which should have been delivered to the country at the end of last year.

The group's chief executive, Tom Enders, said on Feb. 26 it was "unbearable" that it was still negotiating withTurkey over the plane, which is currently parked in Spain.

"I constrain myself to one word: bargaining," he said at Airbus's annual results press conference when asked what was behind the delay.

"The aircraft is ready to go. It is instantly, operationally fit for flight. I find the situation increasingly unacceptable," he added.

Like other developing economies, Turkey has been battered in recent months by U.S. Federal Reserve plans to reduce its monetary stimulus. This had allowed financial investors to borrow cheaply in the United States and invest in high yielding securities in faster growing, lesser developed economies.

But Turkey has also been hit particularly badly by a power struggle between Prime Minister Tayyip Erdogan and an Islamic cleric he accuses of concocting a corruption scandal in an attempt to undermine him.

The political turmoil has heightened the economic uncertainty, causing problems for companies that had invested there, seeing it as a source of future growth.

"Not taking a plane means you don't have to pay the balance," Airbus strategy chief Marwan Lahoud told journalists.

The first A400M was delivered only last year after a four-year delay to France.

Airbus hopes the plane will have good chances on the export market, especially now it is being used by Franceand with a delivery to Germany to come this year.

But the delivery delay to Turkey was clearly frustrating Enders.

"How can you ramp up production if you have no certainty that your customers are taking them and you have to park them," he said.

Enders said he was hopeful that other A400M partners would use their influence to encourage Turkey to take the plane.

"I hope it can be resolved through support from other nations very soon," he said.

Turkish Prime Minister Tayyip Erdoğan had said at a ceremony last week that Turkey would receive the first A400M plane "very soon", without mentioning any problems.