UPDATE 3-Leaders urged to tackle A400M plane row

* Chronic delays said to threaten EU military plane project

* Airbus parent EADS denies cost overruns of 5 bln eur

* EADS shares tumble amid reports of in-fighting

(Rewrites after news conference, adds EADS statement)

By Tim Hepher and Matthias Blamont

PARIS, Feb 10 (Reuters) - European leaders were urged on Tuesday to intervene to resolve chronic delays to Europe's largest military project, the A400M heavy airlifter, to safeguard defence ambitions and secure 30,000 high-tech jobs.

The call from French senators came as shares in manufacturer EADS (EAD.PA) tumbled on concerns about the potential cost of delays to the 20-billion-euro project, while fresh reports emerged of in-fighting inside Europe's largest aerospace group.

Members of two French Senate panels said they would send a 90-page joint report detailing problems and lack of oversight in the Airbus-led programme to French President Nicolas Sarkozy.

"If we want to save this plane, governments must get involved, not parliamentarians. We are asking the president to apply all his weight on this dossier," Josselin de Rohan, a senator with the ruling UMP party, told a news conference.

The report criticised Airbus parent EADS for failing to get to grips sooner with delays in the project, which echo delays to the aeroplane manufacturer's A380 passenger superjumbo, and dismissed the company's argument that its engine makers were almost solely to blame.

But it backed calls by EADS for a renegotiation of the contract, likely to result in some of the extra cost being borne by governments and a slimmed-down suite of military options for the aircraft, in return for a clear industrial timetable.

EADS has said the plane is 3-4 years late and that it needs to slow down initial production and share the risks more fairly.

The report did not say how much delays would cost, but did disclose 5 billion euros had already been sunk into development by the 7 European NATO countries that commissioned the A400M -- France, Britain, Germany, Spain, Belgium, Luxembourg and Turkey.

Le Figaro newspaper reported earlier that EADS had told pan-European defence procurement agency OCCAR that it would cost an identical amount, 5 billion euros, to fix A400M problems.

EADS said it had nothing to add to 1.7 billion euros of provisions already announced and reiterated it was committed to the project. It did not have a date for the first test flight.

EADS shares fell 5.5 percent to 13.61 euros by 1542 GMT.

CANCELLATION CLAUSE

The head of the French Senate finance commission, former finance minister Jean Arthuis, said it would be unthinkable to axe the A400M at a time of bailouts for banks and automakers. It would have a "disastrous social and economic impact," he said.

Defence officials said the delays could be raised on the sidelines of a NATO summit in both France and Germany in April.

Britain has threatened to pull out of the A400M unless it can speed up delivery of its planes, they said, but France is unlikely to give ground on its own deliveries at a time when it is preparing to return to the NATO command structure.

Germany has so far refused to compromise on delay penalties.

According to an official familiar with the matter, governments can cancel their orders under the A400M contract if the first flight slips back 14 months or more from the contracted milestone or target date. This date has never been disclosed but Airbus first said publicly it would fly the plane in Jan. 2008.

However there is a dispute over whether individual states can pull out or whether they are all bound by one contract.

The report also contradicted industry claims that the project was blown off course when European governments vetoed Airbus's choice of a Pratt & Whitney Canada (UTX.N) engine.

Britain's Rolls-Royce, France's Safran (SAF.PA) and Spanish and German companies were commissioned jointly to build the West's largest ever turbo-prop engine to preserve European jobs.

Airbus says this consortium failed to deliver critical engine software on time, though the engine makers deny this.

The report by the Senate finance and foreign affairs panels listed problems with other systems, which it called "at least as serious" as the engine flaws described by Airbus.

It cited the plane's Flight Management System -- the brains of the aircraft supplied by French defence electronics group Thales (TCFP.PA) -- and a GPS positioning system supplied by Safran unit Sagem. Both will have to be simplified, it said.

Two further aids, including one ordered by Germany allowing the aircraft to hug terrain at low altitude, have been abandoned for now, it said. They would have been made by EADS itself.

The Financial Times said the chronic delays had led to friction between the Spanish camp in EADS, which until recently controlled the A400M, and Airbus chiefs in Toulouse who have been ordered to take over responsibility for the project.

(editing by John Stonestreet)

(Additional reporting by Marie Maitre, Jean-Michel Belot)