Germany finds military Airbus cash

March 20, 2002 Posted: 12:40 PM EST

An artist impression of the Airbus A400M military transport aircraft

BERLIN, Germany - The German parliament has approved funding to buy military transport planes from Airbus.

The lower house of parliament's budget committee released 5.1 billion euros (dlrs 4.6 billion) this year -- the first of two installments in a German order for 73 A400M planes.

Plans to build the Airbus A400M, worth 18 billion euros ($15.85 billion) in orders to the European Aerospace, Defense & Space Company, had been held up by a contract dispute between Germany and its European partners.

Seven European partners had sought a clause in the contract, which would have paid compensation should the German parliament baulk at paying the second tranche -- 3.5 billion euros for 33 aircraft -- after this year's German election.

The first payments had been approved in Germany's 2002 budget. But the opposition Christian Democrats had said the government's plans to split the payment between the 2002 and 2003 budgets was unconstitutional.

Germany, which will not start making hard payments for its planes until 2008, is seen as crucial to the eight-nation project because the average cost of a plane would have risen without Europe's biggest economic power bank rolling the production.

EADS (PEAD), which is struggling to reduce its reliance on Airbus and is looking to boost its defence business, said earlier this week it hopes to get the go-ahead to build the A400M military transport plane.

The company believes despite problems getting German parliamentary approval, the programme would get the green light.

"We expect the 18 billion euro A400M contract signed in December 2001 to be enforced this year," said the company on Monday.

EADS's stock was little changed at 16.03 euros in Paris trading on Wednesday.

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