* Airbus takes 1.2 billion fourth-quarter charge on A400M
* Requests new talks with European buyers to ease cash
* Airbus posts stronger-than-expected 2016 profit
* Shares fall 1 percent over A400M uncertainty
(Adds German comments, other reaction, fresh CEO quote)
By Tim Hepher and Cyril Altmeyer
PARIS, Feb 22 Airbus called for new
talks with European governments to ease "heavy penalties" for
delays to its A400M military aircraft, after taking a fresh 1.2
billion euro ($1.3 billion) charge for Europe's largest defence
Chief Executive Tom Enders told reporters Airbus was paying
for the "original sin" of striking an unrealistic deal when the
plane was launched in 2003.
Airbus said fresh problems with engine gearboxes and delays
in supplying the troop and armoured vehicle carrier's defensive
capabilities had led to further severe penalties and cash being
held back by governments.
"We cannot go on like that. This is unacceptable and puts a
huge burden on Airbus and we need to do something about it,"
The agency representing seven NATO buyers - Belgium, France,
Germany, Luxembourg, Spain, UK and Turkey - was not available
for comment. But officials in Germany, the largest A400M buyer
which has been most critical of the project, expressed little
immediate appetite to help Airbus cope with the new problems.
"That's entirely their own doing," said one military
official who asked not to be named.
The appeal comes seven years after Airbus won a 3.5 billion
euro($3.7 billion) bailout for the project, having argued that
politicians had forced it to choose problematic new European
engines over a more viable Canadian alternative.
Hailed at the time as an innovative, fixed-price deal, the
contract foundered over problems with the West's largest
turboprop engines and an over-ambitious schedule for
ground-hugging navigation and other military capabilities.
Tobias Lindner, a Green lawmaker and member of the German
parliament’s budget committee, urged the government to press
for "a new and resilient" agreement but without reducing
penalties for Airbus.
Enders, who is said to privately regret not cancelling the
project before the bailout in 2010, declined to say if Airbus
would threaten to stop building the plane. He described the new
penalties as "inappropriate" given that the A400M was already
deployed in Africa and elsewhere.
'HANDS IN POCKETS'
Airbus shares fell about 1 percent. The latest penalties
bring total A400M writedowns towards 7 billion euros.
Raymond James analyst Harry Breach wrote that Airbus needed
to reassure investors the stream of charges was nearing an end.
Several others questioned how easily Airbus would be able to
strike a new A400M deal in the midst of budget austerity, French
and German elections and political distractions in a group of
nations dealing with Brexit and Europe's border with Syria.
"I am not sure that the states will agree to put their hands
in their pockets once again," said Chloe Lemarie, director of
aerospace and defence research at Mainfirst Bank in Paris.
The A400M overshadowed a narrower-than-expected drop in 2016
core earnings as Airbus delivered a record 688 jetliners.
Core operating income fell 4 percent to 3.955 billion euros
on revenues up 3 percent. Analysts had expected a 7 percent drop
in core profit due to weaker pricing of old models.
Airbus said bottlenecks in the supply chain for its A350 jet
had improved, but called for a "huge effort" from engine maker
Pratt & Whitney to ease delays in A320neo output.
It predicted more than 700 jetliner deliveries in 2017.
It did not give a formal target for orders but executives
say they will lag deliveries for the first time since 2009 as
the aircraft market slows.
($1 = 0.9515 euros)
(Additional erporting by Andrea Shalal, Sabine Siebold; Editing
by Keith Weir and Elaine Hardcastle)