Airbus Refunds €321 Million to Armscor for Cancelled Plane Order

European aircraft-maker Airbus has refunded €321 million to Armscor, a state arms procurement agency, following years of negotiations over a contractual dispute. This was due to the cancellation of an order for eight A400M military transporters in 2009 by South Africa.

South Africa canceled the contract over repeated delivery delays and arguments over cost hikes. This raised speculation over the country's commitment to peacekeeping and humanitarian assistance on the rest of the African continent.

The agreement we signed with Armscor on 29 November 2011 draws a line under the cancelled A400M acquisition, but crucially, it lets us all move forward together to explore further opportunities, including upcoming acquisition projects led by Armscor, TimesLive quoted Airbus Military CEO Domingo Urena saying.

Airbus Military confirmed refunding South Africa's pre-delivery payments for the A400M military transport aircraft while, at the same time, opening the door to further cooperation with South Africa.

In March, Minister of Defence and Military Veterans Lindiwe Sisulu said the government was negotiating hard to get Airbus refund the money to Armscor.

According to DefenceWeb, South Africa announced its intent to participate in the A400M program as a risk-sharing partner in 2004, just a year after seven European countries ordered 180 of the aircraft, ending a 20-year development process.

In 2005, an order for eight aircraft, totalling around €837 million, was placed. Following the cancellation of the contract, Armscor released a statement mentioning that the price had spiralled from R17-billion to R47-billion as a result of delays. However, this was denied by Airbus at that time, saying that the price remained the same and did not go beyond the original contract price of R9.1-billion.