April 12, 2017 / 1:21 PM / 2 years ago

UPDATE 1-Airbus CEO hopes for significant boost from A400M talks

(Adds further CEO comments)

By Tim Hepher

AMSTERDAM, April 12 (Reuters) - Airbus hopes to get "significant" financial help from European governments to ease renewed problems with its A400M military transport aircraft, Chief Executive Tom Enders said on Wednesday.

In February, Airbus called for further help on Europe's largest defence project, following penalties for delays and a contract clause allowing buyers to withhold some cash payments.

In late March, Airbus held talks with European purchasing governments who decided to maintain the penalties, but did not rule out some short-term flexibility..

"We are very grateful that governments have responded to our plea to engage in these discussions, which will hopefully bring significant financial mitigation," Enders told an annual shareholder meeting.

Enders said the drain on cash from the A400M problems should be reduced beyond 2018, after which the company would demonstrate strong potential for cashflow generation.

Enders noted other finiancial headwinds, including delays in deliveries of the A320neo, the planemaker's latest narrowbody jet, which has been held up by shortages of one type of engine.

Enders cited figures suggesting Airbus, whose main rival is U.S. group Boeing, gets $1.5 million more profit for each A320neo, a fuel-saving version of the most popular European jet.

The A350 supply chain has improved but some bottlenecks remain following delays in cabin deliveries, he added.

Enders said Airbus still did not know when, or to what extent, European governments would offer new export credits to support jet sales. The system was frozen last year amid a UK probe into suspected fraud, which has since widened to French prosecutors. (Reporting by Tim Hepher; Editing by Sudip Kar-Gupta)

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