Pricey: European defence ministers are due to sign a R16bn project for the Airbus A400M military transport plane, shown here. Picture: Reuters/HO

Germany explained a R5bn cost overrun on Europe's A400M military transport aircraft yesterday, raising the stakes for a long- delayed maiden flight that Airbus scheduled for tomorrow.

A German defence spokesman said the European aircraft maker's parent company, EADS, had told buyers the �20bn project to develop a European heavy airlifter for combat and humanitarian missions was 25% over budget.

�We are talking about roughly R5bn,a spokesman for the German defence ministry said.

The overshoot follows engine delays and other problems that have plagued Europe's largest defence project. Facing penalties, EADS blames part of the delay on past political interference and is seeking a deal on costs with a group of seven North Atlantic Treaty Organisation (Nato) buyers.

Ministers from Germany, France, Britain, Spain, Belgium, Luxembourg and Turkey will meet in Seville tomorrow on the sidelines of a long-awaited maiden flight for the Airbus A400M, which is nearly two years behind schedule, officials said.

Analysts have said the one- to three-hour flight could boost the chances of rescuing a project that teetered on the brink of collapse until the partnership of European Nato nations agreed to renegotiate the contract earlier this year.

Negotiators are looking for ways to close the gap without asking taxpayers for any further cash, at least for the time being, since leading buyers such as Britain have made plain that there would be no new cash available during the recession.

One way of squaring the equation being considered is to deliver about 25% fewer aircraft under the same budget, equating to an increase in the unit price per aircraft, which now stands at about R100m *1.

The remaining aircraft would then be left in budget limbo until new funds can be found when economies improve. The idea is broadly backed by Britain, France and Spain, according to sources.

But Germany is, so far, reluctant to make concessions on price that would involve a reduction in guaranteed deliveries. Berlin reiterated yesterday that it needed all 60 aircraft it had ordered, a third of the total number of 180 ordered by the core group of seven purchasing states. Reuters

With acknowledgements to Sabine Siebold, Tim Hepher and Business Day.