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Europe

With Engine Contract, Europeans Takes Care of Own

How a successful last-minute lobbying campaign by European governments and business leaders kept a huge contract to build engines for a new Airbus military transport plane in Europe.

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Keeping it in the family: Europeans hang on to the engine contract for their A400M military planes.

European aerospace consortium EADS chose EuroProp International to supply engines for its new A400M military transport planes, after the firm cut its price to come closer to a previous bid from Canadian competitor Pratt & Whitney.

EADS directors said Tuesday they awarded the contract -- valued at about US$3.4 billion (€2.98 billion) -- to EuroProp on Tuesday "in light of (EuroProp's) substantial effort" to make the price more attractive. EADS owns 80 percent of Airbus.

'Bizarre' decision

The decision was hailed as "unfair" and "bizarre" by a Canadian aerospace lobbyist. Initially, Pratt & Whitney appeared to be the clear bid winner, coming in a full 20 percent lower than EPI. But EADS gave EuroProp time to revise its offer, noting the strong "political dimension" of the contract award.

It is currently unclear whether EuroProp lowered its bid the full 20 percent or just 10 percent, but apparently it was enough to satisfy EADS Chairman Manfred Bischoff. "We have decided to opt in favor of the engine supplied by the European consortium as presenting overall the best solution, and in light of a substantial effort on the agreed-upon price."

Pressure from France

EuroProp groups the French state-owned engine-maker Snecma, Rolls Royce of Britain, MTU of Germany and ITP of Spain. EADS and Airbus are reported to have come under strong pressure from European governments led by France -- which owns Snecma as well as a 0.06 percent share in EADS -- to choose EuroProp over its North American rival.

The contract to supply the A400M engines is seen as strategically important to the European aerospace industry. The A400M is the answer to several European countries' pressing need for their own military-airlift vehicle. Its launch is scheduled for 2009, and 180 orders are already on the books.

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