Airbus shares fall as A400M probe gets off to slow start
By Tim Hepher and Sarah Morris
PARIS/MADRID (Reuters) - Airbus Group <AIR.PA> investors fretted on Monday about the fate of Europe's largest defense project as an investigation into what caused Saturday's fatal crash of an A400M military transporter plane got off to a slow start.
Four crew were killed in the accident during testing outside Seville, which prompted Britain, Germany, Malaysia and Turkey to ground their fleets of Europe's new troop and cargo carrier.
France said it would keep flying its planes, while Airbus pledged to resume flight testing on Tuesday with the head of its military aircraft business, Fernando Alonso, on board.
There was no official word on the cause of the crash but investigators' attention was expected to focus partly on the plane's turboprop powerplants. Germany's Der Spiegel magazine reported that a survivor had said the plane suffered “multiple engine trouble” shortly after takeoff.
A source familiar with the matter confirmed engines were one of the areas under scrutiny but stressed it was too early to say what had caused the crash, with the crucial black box flight recorders held under judicial seal and yet to be analyzed.
Airbus declined to comment. "We have to wait for the results of the investigation," a spokeswoman said.
Shares in Europe's largest aerospace group fell as much as 4.5 percent before closing at 62.09 euros, down 2.1 percent.
The A400M Atlas was developed for seven European NATO nations -- Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey -- at a cost of 20 billion euros ($22 billion).
Malaysia is the only export customer.
The plane entered service in 2013, over three years behind schedule, and just 12 of 174 aircraft sold have been delivered.
Problems in the development of the West's largest turboprop engines helped to generate billions of euros of cost overruns and a bailout by launch nations in 2010.
New technical problems with A400M military features surfaced last year, leading to fresh delays and a management shake-up.
People with direct knowledge of the matter say the plane suffered engine problems on its maiden flight in December 2009, delaying its landing in front of hundreds of VIPs.
The engines were supplied by Britain’s Rolls-Royce <RR.L>, France’s Safran <SAF.PA>, MTU Aero Engines of Germany <MTXGn.DE> and Spain's Industria de Turbo Propulsores.
That consortium was picked after European politicians objected to Airbus’s proposal of an imported engine from Canada.
MTU, which had borne the brunt of criticism over the earlier development problems, declined to comment on Spiegel's report.
FRESH CONCERN
Analysts said Saturday's accident renewed concerns about deliveries and long-term exports of the plane, but Airbus Group chief executive Tom Enders reaffirmed the company's commitment to the program as he paid tribute to the crew.
In a letter to staff seen by Reuters, Enders said the quick resumption of testing would "demonstrate to our customers, the air forces, that we fully trust this great transport plane and are as committed to the program and the further ramp-up of deliveries and capabilities as ever."
Enders asked the company's 137,000 employees to observe a minute's silence for the captain, co-pilot and two test engineers who died onboard. Two others remain in hospital.
“The men who lost their lives in Sevilla were great professionals; they knew about the risks of their job and they would not want us to stop flying,” he said.
A memorial service was expected to be held in Seville's cathedral on Tuesday.
In February, Airbus took 551 million euros in charges for the latest A400M delays, bringing the total written off over the lifetime of the project to more than 4.75 billion euros.
"Airbus can ill afford more delays," Hamburg stockbrokers Berenberg said in a note.
"Longer-term, this latest development will almost certainly hamper the ability to sell A400M in the export markets, the only way this program will ever make any money."
People close to the project expressed concerns over the impact of the crash on morale in the Spanish production plant.
The crashed aircraft was due to be delivered to Turkey and was on its maiden test flight when it plowed into a field one mile (1.6 km) north of Seville's San Pablo airport.
Alonso, the newly promoted head of Airbus Group's military aircraft business, said Airbus stood ready to assist investigators and called for initial results "as soon as possible".
But the status of the investigation remained uncertain, with conflicting reports about who would be responsible for the probe. Three sources said the black boxes were being held by judicial authorities, delaying a start to the enquiry.
A person briefed on the matter said late on Monday that the Spanish government had commissioned the country's military authorities to carry out the crash investigation.
But in what could yet be a time-consuming process, a Spanish judge must first decide whether to release the black boxes and who should be allowed to analyze their contents, another source familiar with the judicial process said.
(Additional reporting by Emma Pinedo, Stephen Brown, Maria Sheahan, Sabine Siebold, Julien Toyer, Paul Day and Sudip Kar-Gupta; Editing by Catherine Evans)
