Friday, January 22, 2010

Pentagon underscores commitment to F-35

By Andrea Shalal-Esa
Defense News ~ WASHINGTON, Jan 21 (Reuters) - Deputy Defense Secretary William Lynn on Thursday underscored the Pentagon's commitment to Lockheed Martin Corp's (LMT.N) $300 billion F-35 fighter jet, saying the U.S. government and its allies still planned to buy 3,000 of the new fighters over time.
"We are heavily investing in the F-35. A successful Joint Strike Fighter is at the heart of our continued air superiority," Lynn told industry and military officials at a conference hosted by Tufts University and the Institute for Foreign Policy Analysis.
Draft budget documents obtained by Reuters show the department will request $10.7 billion to continue the F-35's development and buy 42 aircraft in fiscal year 2011, 10 less than initially planned.
The Pentagon "has adjusted F-35 procurement quantities based on new data on costs and on likely orders from our foreign nations partners and realigned development and test schedules," the document said without giving details.
Lynn, speaking to reporters after his speech, acknowledged the program had run into some problems typical of large new weapons programs, but said the department was implementing steps to bring the program back "in line."
He said there was no plan to halt work on any of the three variants of the radar-evading new fighter jet. "There's no thinking of changing that kind of fundamental," he said.
Asked if the program could breach cost thresholds that would trigger a notification to Congress and a life-or-death program review, Lynn said Pentagon officials would address that issue next week.
He said he was aware of reports that Britain could halve its proposed buy of F-35 fighters for an aircraft carrier due to rising unit costs and increased budget pressures, but said the British had not yet made a final decision on the issue.
Lynn said he did not anticipate that any such cuts would increase the unit cost of the new fighters and undermine its business case as a relatively low cost replacement for Lockheed's F-16 and 12 other warplanes.
"There's always going to be puts and takes on orders. I think the fundamental core of the buy is still there -- it's going to be several thousands purchased," Lynn said. "I don't think there's a threat there right now."
A senior Pentagon official told Reuters in November that a "couple" of unnamed co-development partners were delaying planned purchases of the jet, a move that will boost initial prices of the costliest ever U.S. arms purchase.
Eight international partners have co-financed the F-35: Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway.
Northrop Grumman Corp (NOC.N) and Britain's BAE Systems (BAES.L) are Lockheed's key subcontractors on the new fighter.
(Reporting by Andrea Shalal-Esa; Editing by Phil Berlowitz)

New ATI Radeon E4690 MXM Delivers Blazing-Fast Graphics for the Embedded Market

New Industry Standardized Module Offers High-Performance Graphics and Superior HD Video Playback in a Compact Form Factor
Defense News Updates ~ TAIPEI, Taiwan--January 22, 2010, (BUSINESS WIRE)--At the DIGITIMES Tech Forum (DTF) 2010, AMD (NYSE: AMD - News) today introduced the ATI Radeon™ E4690 Mobile PCI Express module (MXM) for the graphics-intensive embedded systems. The industry-standard MXM 3.0 specification for graphics subsystems calls for reduced power, improved cooling capability and a lower z-height, enabling designers to create smaller, more efficient embedded systems and speed time to market. The ATI Radeon E4690 MXM features more than triple the 3D graphics performance of previously available solutions with low CPU utilization and brilliant picture quality.1 With its massively parallel, programmable architecture, the ATI Radeon E4690 MXM is designed for compute intensive, embedded applications such as digital signage, image recognition, signal processing and surveillance, arcade and casino games, medical imaging, and more.
Working in collaboration with ALT Software, a leading supplier of 2D and 3D graphics, AMD is able to offer customers an alternative to custom programming by developing a standards-based parallel processing API, helping them to improve performance in embedded computing systems by leveraging the power of the graphics processor (GPU). For example, the GPU has become a standard hardware component in many aerospace and defense systems, making it an ideal parallel processing solution.

Unsurpassed Performance, Power Efficiency, and Flexibility
*The ATI Radeon E4690 MXM features 512MB of on-board GDDR3 memory, 320 shader processors, a comprehensive set of display output options and adjustable system clocks for exacting power and performance requirements.
*As the industry’s only embedded graphics chip to offer support for both Microsoft DirectX® 10.1 and AMD’s Unified Video Decoder 2 (UVD 2), the ATI Radeon E4690 MXM enables competitive advantages for AMD’s embedded customers by providing outstanding graphics support coupled with high quality video playback performance.
*Incorporating ATI PowerPlayTM intelligent power management technology, the ATI Radeon E4690 MXM is designed to optimize power consumption and enable exceptional performance per Watt for power sensitive embedded applications.
*System designers have ultimate flexibility with a comprehensive selection of outputs including dual independent display controllers, integrated DisplayPortTM, integrated single & dual-link LVDS, integrated single & dual-link DVI/TMDS/HDMI and analogue outputs.
*Supported by ATI Stream technology, the ATI Radeon E4690 MXM can replace numerous system hardware components (e.g. FPGAs, DSPs etc.), helping to reduce overall system power, size, and cost.

“As the graphics requirements for embedded systems continue to increase, AMD has armed the ATI Radeon E4690 MXM with features that are important to our customers and done so within an industry-standard specification that helps simplify design, development and market delivery,” said Richard Jaenicke, director of Embedded Discrete Graphics for AMD. “Based on the successful ATI Radeon™ E4690 GPU, the ready-made ATI Radeon E4690 MXM solution provides the graphics performance, energy efficiency and reliability customers need. This, coupled with the module’s five year product life cycle, makes the ATI Radeon E4690 the easy answer for system designers looking to gain competitive advantage in the marketplace.2”
“The ATI Radeon E4690 MXM module is an ideal solution for our aerospace and defense customers,” says Dan Joncas, VP Sales ALT Software. “Its parallel processing capabilities open up a whole new range of applications including video surveillance, radar processing, target acquisition and synthetic vision. This module is ideal for manufacturers of embedded systems that require high-performance computing and advanced graphics.”

Supporting Resources
Product page:
DTF 2010 page:
About AMD
Advanced Micro Devices (NYSE: AMD - News) is an innovative technology company dedicated to collaborating with customers and technology partners to ignite the next generation of computing and graphics solutions at work, home and play. For more information, visit

Copyright 2010, AMD, the AMD Arrow logo, ATI, the ATI logo, PowerPlay, Radeon, and combinations thereof, are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and may be trademarks of their respective owners.

1) Performance is based on the comparison of ATI Radeon E4600 to ATI Radeon E2400 using 3DMark06 tests run in the similar system configuration: MSI K9A2 Platinum (790FX, SB600), AMD Athlon X2 7850 (2.8 GHz), 2 GB DDR2 800MHz 5-5-5-12, Video Driver: 8.612 RC1 (Catalyst 9.5), Windows Vista Ultimate 32-bit SP1 Note graphics components of 3DMark06 are insensitive to system configuration when there is sufficient frame-buffer size.
2) Availability subject to change without notice.

AMD Global Communications
John Swinimer, 905-882-2600 ext. 2704

US Air Force says Lockheed missile "back on track"

* Contract underscores support for program
* Work underway to upgrade mechanical fuze
By Andrea Shalal-Esa
Defense News Updates ~ WASHINGTON, Jan 21 (Reuters) - Lockheed Martin Corp's (LMT.N) $6 billion radar-evading JASSM cruise missile is "back on track" after acing 18 of 19 tests since September 2009, the Air Force colonel in charge of the program said on Thursday.
The Air Force on Wednesday awarded Lockheed a $245 million contract to build an eighth lot of 160 more baseline and extended range Joint Air-to-Surface Standoff missiles (JASSM) for the Air Force and foreign military customers.
"With the award of the Lot 8 contract, the Air Force has further expressed its confidence that the program is back on track to continue delivering its unique combination of stealth, standoff precision, and flexibility off of both fighters and bombers," Air Force Colonel Stephen Demers told Reuters.
The Air Force last year threatened to cancel JASSM, a long-range missile designed to destroy fixed and moving targets, after years of repeated technical problems if the next round of tests did not show markedly better missile reliability.
The missile succeeded in 15 of 16 tests last August, assuaging those concerns.
The weapon was declared combat-ready five years ago and has been deployed despite several testing failures, but it faced increased scrutiny as Pentagon officials targeted weapons programs with cost overruns and technical problems.
Demers declined comment on the fiscal 2011 budget, which is due to be released on Feb. 1, but said the program now had the support of the Air Force and Pentagon leaders, and he did not anticipate any "future programmatic issues."
Alan Jackson, director of JASSM programs for Lockheed, said Wednesday's contract brought the total number of missiles under contract to 1,200, about one-fourth the total number of missiles the Air Force plans to buy in coming years.
The missile reached a 94 percent reliability rate in the most recent tests, and has an overall reliability rate of well over 80 percent over the history of the program. The Air Force aims to reach a reliability rate of 90 percent by 2013.
Demers said the Air Force would continue testing the reliability of the missiles, although the number of tests could be reduced in coming years.
In his annual report to Congress, the Pentagon's chief weapons tester acknowledged that testing had shown improved reliability, but said more flight tests were needed to characterize the performance of the weapons.
The report, a copy of which was obtained by Reuters, also raised questions about the Air Force's decision to halt work on an electronic fuze for the missile, noting that 4 of 26 missiles launched in fiscal year 2009 had fuze issues.
"The Air Force should renew the pursuit of the Electronic Safe and Arm Fuze, ensuring the availability of a second fuzing option," said the report.
Demers said the service had funded an alternate program to upgrade the missile's existing mechanical fuze to a model with fewer moving parts, an effort he said would help the missile achieve the reliability target "even faster."
Officials familiar with the issue, who were not authorized to speak on the record, said upgrading the current mechanical fuze would save millions of dollars in development costs.
While industry had developed an electronic fuze, it would be difficult to use on JASSM, they said, noting that the missile is designed to penetrate many feet of concrete.
(Reporting by Andrea Shalal-Esa; Editing by Phil Berlowitz)

ViaSat Awarded First Limited Production Order for MIDS JTRS Terminals

Production marks major milestone in JTRS program
Defense News Updates ~ CARLSBAD, Calif., Jan. 21 /PRNewswire-FirstCall/ -- ViaSat Inc. (Nasdaq: VSAT) has been awarded a Limited Production (LP) order valued at $14.4 million for Multifunctional Information Distribution System Joint Tactical Radio System (MIDS JTRS) terminals for the U.S. government. The LP award resulted from a competitive procurement for 41 terminals through the Space and Naval Warfare Systems Command (SPAWAR). ViaSat was awarded 100% of the terminals in the procurement. The order is being awarded under the MIDS Indefinite Delivery/Indefinite Quantity contract initially executed in January 2000. The MIDS JTRS terminals are for F/A-18E/F and E-8C Joint STARS aircraft and spares.
The MIDS JTRS program was implemented as a Pre-Planned Product Improvement (P3I) to the current MIDS Low Volume Terminal (MIDS-LVT). MIDS JTRS has completed contractor qualification testing and initial F/A-18E/F integration in anticipation of operational testing in 2010. Pre-production terminals have been undergoing flight tests at Patuxent River Naval Air Station and China Lake Naval Air Weapons Station for several months. The terminal has successfully completed security verification testing and is in the final stages of obtaining NSA certification. ViaSat expects to receive conditional first article approval in February 2010.
MIDS JTRS is a joint development of ViaSat and Data Link Solutions and provides a migration path from the MIDS-LVT to a certified, reprogrammable, software-defined radio architecture for tactical data links. The MIDS JTRS adds three programmable channels to the legacy Link-16 and TACAN capabilities of the MIDS-LVT. The three new channels are designed to host future advanced airborne networking waveforms. MIDS JTRS is "plug-and-play" backward compatible with MIDS-LVT so it can easily replace the MIDS-LVT, but remain interoperable.
About ViaSat (
ViaSat produces innovative satellite and other digital communication products that enable fast, secure, and efficient communications to virtually any location. The company provides networking products and managed network services for enterprise IP applications; is a key supplier of network-centric military communications and encryption technologies and products to the U.S. government; is the primary technology partner for gateway and customer-premises equipment for consumer and mobile satellite broadband services; and owns WildBlue, the premier Ka-band satellite broadband service provider. ViaSat also offers design capabilities and a number of complementary products including monolithic microwave integrated circuits and modules, DVB-S2 satellite communication components, video data link systems, data acceleration and compression, and mobile satellite antenna systems. ViaSat is based in Carlsbad, CA, has major locations in Duluth, GA, Germantown, MD (Comsat Laboratories), and Greenwood Village, CO (WildBlue), along with additional field offices and service centers worldwide.
Safe Harbor Statement
This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934, including statements about operational testing, First Article Approval, and deliveries and performance of the ViaSat MIDS JTRS terminal. ViaSat wishes to caution you that there are some factors that could cause actual results to differ materially, including but not limited to: contractual problems, product defects, manufacturing issues or delays, regulatory issues, technologies not being developed according to anticipated schedules, or that do not perform according to expectations; and increased competition and other factors affecting the wireless communications and secure networking industry generally. In addition, please refer to the risk factors contained in ViaSat's SEC filings available at, including ViaSat's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. ViaSat undertakes no obligation to update or revise any forward-looking statements for any reason.
Comsat Labs and Comsat Laboratories are tradenames of ViaSat Inc. Neither Comsat Labs nor Comsat Laboratories is affiliated with COMSAT Corporation. "Comsat" is a registered trademark of COMSAT Corporation. All additional products are trademarks of their respective owners.

Northrop Grumman Will Enter Competition as Prime Contractor for Missile Defense Agency's Ground-based Midcourse Defense Contract

Defense News Updates ~ HUNTSVILLE, Ala., Jan. 21, 2010 (GLOBE NEWSWIRE) -- Northrop Grumman Corporation (NYSE:NOC - News) today said it will enter the competition as a prime contractor for the U.S. Missile Defense Agency's (MDA) Ground-based Midcourse Defense (GMD) Development and Sustainment contract.
The company cited its ability to leverage extensive experience and best practices from missile-related programs for the missile defense program, commenting on a draft Request for Proposals issued Jan. 19 by MDA.
"We have the core people, processes, and tools in place to deliver robust missile defenses under this contract," said John Clay, vice president of Missile Systems for Northrop Grumman's Aerospace Systems sector. "Northrop Grumman already is well underway in bringing together the capabilities to meet GMD's development, testing, training, operations, support and sustainment challenges."
Northrop Grumman is a primary supplier of technologically advanced missile and missile defense weapon systems, including the ICBM Prime Integration Contract, MDA's Space Tracking and Surveillance Demonstration program, and the Missile Defense Integration and Operations Center, Colorado Springs, Colo.
Northrop Grumman Corporation is a leading global security company whose 120,000 employees provide innovative systems, products and solutions in aerospace, electronics, information systems, shipbuilding and technical services to government and commercial customers worldwide.

Bob Bishop

Northrop Grumman Aerospace Systems
Cell: 310.251.0261

IDGA: Extending Service Life of Aging Aircraft

Defense News Updates ~ NEW YORK-- January 21, 2010, (BUSINESS WIRE)--IDGA’s Cockpit Avionics Summit is the premier military avionics conference in the United States. As the continually aging aircraft fleet is tasked at the highest levels in history, the DoD has outlined road-maps to extend their service life and utility with technological avionics improvements across the board. “At the same time, the growing needs of a constantly changing war environment must be addressed while increased congestion and safety concerns require attention as well,” says Keith Johnson, General Manager of IDGA and 12 year veteran aviator of the US Air Force.
This year’s Cockpit Avionics Summit will detail current efforts and developments in the fields of NextGen requirements and how the DoD will meet the timeline, interoperability, and plans to adapt in an uncertain future. In today’s complex and rapidly changing battle environment, aircraft operators are becoming increasingly inundated with never-before seen challenges necessary for mission success and ultimately safety.
IDGA’s Cockpit Avionics Summit will be held February 9 -11, 2010 at Hilton Old Town Alexandria in Alexandria, VA.
The Institute for Defense & Government Advancement (IDGA) is a non-partisan information-based organization dedicated to the promotion of innovative ideas in public service and defense through live conferences and events. We bring together speaker panels and events comprised of military and government professionals while attracting delegates with decision-making power from military, government, and defense industries. For more information, please visit

Marketing IDGA

Andy Kaftan, 646-502-3267

US Air Force sees no big changes to tanker terms

* No details on changes to financial terms
* Final competition terms due out next month

By Andrea Shalal-Esa
Defense News Updates ~ WASHINGTON, Jan 21 (Reuters) - The U.S. Air Force is eyeing some changes to "financial arrangements" for a multibillion dollar competition for new aerial refueling tankers, but Pentagon officials declined to say whether that could signal a departure from the fixed price terms they initially sought.
Air Force Chief of Staff General Norton Schwartz said on Thursday he did not expect any substantial changes on the requirements for the tanker, but declined to elaborate on possible changes to what he called the financial arrangements.
Schwartz, speaking to reporters on the sidelines of an aerospace conference, said the Air Force planned to release the final terms for the competition within a month after the release of the Pentagon's fiscal 2011 budget on Feb. 1.
Industry executives have said they expect the terms to be released around mid-February, possibly around Feb. 12.
Schwartz said possible changes to the financial structure of the tanker competition were sparked by the Air Force's dialogue with industry about possible financial risks associated with the proposed contract terms.
Deputy Defense Secretary William Lynn also declined on Thursday to discuss any possible changes, saying the Pentagon and Air Force would explain their views when the final request for proposals (RFP) is released next month.
Pentagon budget documents obtained by Reuters include funding for development of a new aerial refueling tanker at an estimated cost of $35 billion, forecasting a contract award this summer and procurement to start in fiscal 2013.
Northrop Grumman Corp (NOC.N) and Europe's EADS (EAD.PA) won a projected $35 billion contract for 179 tanker planes in February 2008, but the Pentagon canceled it after government auditors upheld a protest filed by rival Boeing Co (BA.N).
Northrop and EADS have told the Pentagon they will not bid for the work this time around unless major changes are made to draft rules for the competition that were released last year.
Asked if he was worried about the prospect of awarding a sole-source contract to Boeing given the long history of the Air Force's attempts to buy new tankers, Schwartz said the clear preference was to have a competition.
"I'm not going to speculate what others might do, but clearly we hope to have two or more offerers," he said. "But the bottom line is again that we on the customer side get to decide what we need."
Congress killed an earlier Air Force plan to buy 100 767-based tankers from Boeing amid a huge procurement scandal that sent a former top Air Force official and Boeing's former chief financial officer to prison for violating federal conflict of interest rules.

(Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn)

World's Fastest Rad-Hard PowerPC Processor Ready for Space

Broad Reach Engineering Completes Development of BRE440 PowerPC® CPU
Defense News Updates ~ TEMPE, Ariz.--January 21, 2010, (BUSINESS WIRE)--Broad Reach Engineering today announced completion of development and delivery of the aerospace industry’s fastest, highest performance radiation-hardened microprocessor.
“The Rad-Hard BRE440 PowerPC CPU is fully developed, in stock and ready to serve in radiation-rich environments ranging from on-orbit and interplanetary space to nuclear, defense and medical applications,” said Broad Reach CEO Chris McCormick. “With its combination of memory controllers, Ethernet, high speed and low power consumption, the BRE440 chip represents one of the most significant system-on-a-chip advancements for space flight in more than a decade, and is poised to enable a new generation in high-reliability processing solutions. We are currently using this chip on our next-generation GPS receivers and our Mirideon 3U single board computer.”
The device is built on Honeywell’s rad-hard HX5000 150nm SOI process and is based on a PowerPC 440 core licensed from IBM. The BRE440 processor design includes on-chip floating point unit, memory controllers, L2 cache, two Ethernet ports, two serial ports, four DMA channels, EDAC controller and PCI interface. Speed is configurable up to 133MHz and is 2 MIPS/MHz.
About Broad Reach Engineering
Broad Reach Engineering produces spaceflight hardware and software solutions, integrating vehicle design, component design and engineering services for aerospace, scientific, commercial and military customers on four continents and for global space centers and contractors. The company’s radiation-hardened avionics and electronics product lines include the next-generation BRE440 “system-on-a-chip” – the world’s fastest radiation-hardened microprocessor. Founded in 1997, the company has office and laboratory locations in Tempe, Ariz., Boulder, Colo. and Golden, Colo. For more information, please visit

The PowerPC name is a registered trademark of IBM Corp. and used under license there from.

Broad Reach Engineering
John Metzger,

SAMSUNG Techwin and SAMSUNG | GVI Security Joining Forces

Will Be One Unified SAMSUNG Product Line
Defense News Updates ~ RIDGEFIELD PARK, NJ and CARROLLTON, TX--(Marketwire - 01/21/10) - Samsung Techwin America and GVI Security Solutions today announced that they will establish a strategic partnership to provide optimal security solutions to both companies' customers that will ultimately lead to one product line. This is in response to the announcement that the Samsung Techwin and Samsung Electronics Video Security Products businesses are being merged effective January 1, 2010, due to the acquisition of the Samsung Electronics Company's Video Security Products business by Samsung Techwin. Both the Techwin and Electronics names will be dropped for the surveillance product line and the company will go to market strictly as Samsung.
"The combination of Samsung Techwin and Samsung Electronics resources are in essence doubling the resources that Samsung is dedicating to electronic security in order to become an industry leader. It will allow us to effectively increase the Video Security Products business and technological capabilities of both companies into a stronger, singularly focused digital video security systems organization. We are taking actions to ensure increasing sales, continued service and customer satisfaction for all Samsung Security Products," said JW Ahn, President and CEO of Samsung Techwin America.
"This is very good news for our customers and the video surveillance market in the Americas," emphasizes Steve Walin, CEO of GVI. "It is only natural, therefore, that we enter into a strategic partnership with Samsung Techwin America, replicating a similar symbiotic relationship we had with Samsung Electronics. Our SAMSUNG GVI Security name will change to SAMSUNG SECURITY."
According to Walin, legacy product lines will be maintained until superior replacements are developed and released, ultimately leading to one cohesive Samsung product line. In Latin America, SAMSUNG SECURITY (formerly SAMSUNG GVI Security) will serve the entire region except for Argentina, Brazil and Chile, where both companies will continue to serve these markets together.
About SAMSUNG Techwin:
Samsung Techwin America is a leading supplier of cutting edge video products to the security industry offering IP, Thermal and Analog Cameras, Network and Digital Video Recorders and LCD Monitors. Office locations on the East and West Coast facilitate extended technical support hours and an extensive inventory permitting same day shipments. Samsung Techwin America is a subsidiary of Samsung Techwin, a four billion dollar organization in the high technology industry. For more information, visit
About GVI Security Solutions:
GVI Security Solutions (GVI) (dba SAMSUNG GVI Security) is a leading provider of video security solutions to the homeland security, institutional and commercial market segments. GVI offers the complete Samsung line of video security products. GVI recently announced the acquisition of its first owned Intellectual Property (IP) VMS technology called autoIP™. The company offers its products and services through local, regional and national system integrators and distributors in North and Latin America. GVI operates sales and support offices in Dallas, Texas; Mexico City, Mexico; Sao Paulo, Brazil; and Bogota, Colombia. For more information, visit

For More Information, Contact:
Henry Kim
Samsung Techwin America
Esra Pope
972-245-7353 ext. 2288

EADS may need finance if A400M efforts fail-report

Defense News Updates ~ BERLIN/PARIS, Jan 21 (Reuters) - EADS (EAD.PA) could be forced to raise new finances if A400M buyer nations fail to agree a price increase for the delayed plane and costs continue to rise, according to a report commissioned for buyer nations.
It does not say how such finances would be raised, but EADS has consistently said it does not need a capital increase.
The report, delivered in December by PricewaterhouseCoopers, a summary of which was obtained by Reuters, lays out the dilemmas facing the Airbus parent and seven European countries being discussed in talks on Thursday.
EADS wants 5.2 billion euros ($7.4 billion) of extra support to complete the transporter project, which is running 7.6 billion euros over budget after planned cost savings, according to the PwC report.
Below are some of the options discussed in the report.
For accompanying tables, please click on
EADS declined to comment on the six-week audit and report.
PwC considers various options summarized below by Reuters from the textual summary of the audit report.
If the A400M continues with no price increase and EADS is forced to shoulder the entire projected 7.603 billion euro cost overrun, with low cash payments from the nations up to 2013:
* Short-term liquidity would remain adequate
* Gross cash in 2013 would be below a level deemed acceptable by the EADS board
* Credit rating downgrade likely
* EADS still able to access existing funding sources
* Reduced customer payments
* Market reaction (credit downgrade/reduced payments) could have significant negative impact on the Airbus business model.
The report says that if the projected loss rises above the current 7.603 billion euros, and there is still no price increase, "we believe the group would be unable to continue without a fresh source of financing support".
* Cancelling the project would have more severe implications for EADS than the "continuation" scenario, the report says.
* There would be a "more adverse" credit rating impact
* Funding sources would likely be restricted.
A scenario in which EADS walks away from the contract (a prospect floated by Airbus officials in recent weeks) would be worse than cancellation due to extra costs and damages claims.
If nations put more funding into the programme from 2010 to 2013, this would alleviate the gross cash deterioriation forecast by PwC and reduce the risk of negative market reaction, the report says.
The report's conclusion said: "Whilst the case for a recurring price increase is not proven, not least because the level of the loss remains unclear, an aggregate increase in A400M funding would reduce the external risks that we (PwC) have identified."
But it warns European purchasing nations that any such increase "should be contingent on gaining assurance on the implementation of much improved programme management controls".
(Reporting by Tim Hepher and Sabine Siebold)