France confident UK won't quit A400M - source

PARIS, July 2 (Reuters) - France is confident Britain will commit to the Airbus (EAD.PA) A400M military transport plane but disagreements remain over how to share out the costs of delays to the programme, a French presidency source said on Thursday.
The A400M, which would be built by European planemaker Airbus (EAD.DE), has faced repeated production delays and cost overruns. European nations involved in the project on June 22 postponed a decision on whether to commit to it for good.
"The question is to know ... what balance we are going to find between the states and (Airbus parent) EADS to overcome both scheduling and financing difficulties," said the senior official at President Nicolas Sarkozy's office.
The source was speaking to reporters ahead of a summit in France on Monday between Sarkozy and British Prime Minister Gordon Brown, during which the A400M will be discussed.
British defence procurement minister Quentin Davies signalled during a meeting on the A400M last month in Spain that much progress needed to be made to rescue the 20 billion euro ($28 billion) troop and equipment transporter.
Davies declined to say whether Britain would remain part of the programme, which also involves France, Germany, Spain, Belgium, Luxembourg and Turkey.
Asked whether the British were preparing to drop out, the French presidency source said: "The answer is no."
The official said Britain, like other countries involved in the A400M including France and Germany, faced tough budget constraints due to the recession.
"At the same time, the fact is that Britain and France need transport planes and will have to buy some one way or the other.
"The cost of abandoning the project would be much higher than the cost of continuing with it because we would have to add up the cost to EADS, and thus to the states which are shareholders in the company, and the cost of buying the planes we need from someone else."
"Thus we have all reached the same wise conclusion, which is to continue this great enterprise," the source said.
Brown and Sarkozy would certainly discuss how long to allow for negotiations on sharing the costs of the delays, the source said, mentioning one month, three months or six months as possible timeframes.
"It's a very difficult discussion given the general context, but the will to succeed is there," the source said.
The seven nations involved in the A400M met last month to decide whether to agree to a renegotiation of the contract requested by Airbus Military.
Airbus says the original contract signed in 2003 is too restrictive for a complex defence project and blames part of the delay on political interference in the choice of suppliers.
The countries agreed to extend a moratorium allowing time for discussions to the end of July.
The French presidency source said what was important at this stage was "to allow ourselves all the time we need" and Sarkozy would make that point to Brown on Monday. (Reporting by Estelle Shirbon, Editing by Marcel Michelson)