By Tim Hepher
PARIS (Reuters) - Airbus parent EADS looked close on Wednesday to clinching a long-awaited deal with European governments to rescue the A400M military transport plane, boosting its shares and lifting a shadow from over 10,000 jobs.
EADS is ready to give broad backing to a package of multinational support worth 3.5 billion euros (3 billion pounds) to bail out the loss-making project, a source familiar with the matter said. An agreement in principle should be firmed up this week but details need to be finalised, the source said.
"It is 90 percent okay. The basics are there. It clarifies things a lot," the source said, asking not to be identified because the talks remain confidential.
A second source with knowledge of the matter said EADS and buyers were still in talks over the plane, but characterised these now as a "clarification" exercise rather than negotiation.
This source said EADS would back the take-it-or-leave-it deal offered by seven nations, but declined to give a timetable and cautioned that final details were among the most complex.
An EADS spokesman declined to comment on its response to the offer and said it was still being studied.
Shares in the world's second largest aerospace company after Boeing rose up to 6.4 percent as concerns faded that EADS would have to bear the entire 5.2 billion euro loss on Europe's largest defence project -- or walk away at even greater cost.
At 10:26 a.m. British time they were up 4.6 percent at 14.43 euros.
FINAL OFFFER
The A400M troop carrier is designed to fill a gap between the veteran Lockheed Martin C-130 Hercules and the larger jet-powered C-17 from Boeing, but has been plagued by problems in developing its powerful turbo-prop engines.
Despite taking to the skies in a maiden test flight last December, it will not be ready for military or humanitarian missions before late 2013, four years later than scheduled.
NATO partners Britain, France, Germany, Spain, Belgium, Luxembourg and Turkey ordered 180 planes for almost 20 billion euros but the cost of building them is set to top 30 billion.
After cost savings and write-downs, EADS has been in talks with buyers to plug a remaining gap of 5.2 billion euros. Failure to finalise a deal could hit 10,000 production jobs.
Talks over the dispute have dragged on for months, fuelling testy exchanges between Airbus and Germany, whose nominal share of the proposed rescue is one third, or over 1.1 billion euros.
France said there would be no more money on the table after the new offer, which would leave EADS with A400M losses of 1.7 billion euros on top of 2.4 billion it has already written off.
"This is an important step and we have reached the end of the line," Defence Minister Herve Morin told Les Echos newspaper.
Time for a deal is running out as EADS faces pressure not just from buyers but also from its own auditors, who are seen as increasingly reluctant to let EADS defer potentially hefty charges beyond its fourth-quarter 2009 results due on March 9.
Sources familiar with the talks said that in addition to offering a price increase of 2 billion euros, buyers were prepared to stump up guarantees of 1.5 billion euros, part of which would be repaid as royalties on future exports.
How that is packaged could determine the size of provisions since loans cannot be used to avoid charges.
Facing weak budgets, several nations may opt to take fewer planes rather than spending new cash to fund part of the deal.
But there were signs of last-minute squabbling among buyers as Britain fought for as much as possible of the 1.5 billion euro top-up to be reimbursable to taxpayers. One report said Britain may opt out of the additional part of the offer.
(Editing by Marcel Michelson and Rupert Winchester)
