It is the biggest joint venture ever in the European defence industry, and was seen as crucial for the credibility of the European Union's commitment to strengthen its military capability and coordination.

Tuesday's signing confirmed orders for 180 A400M military transport planes with delivery from 2008.

Germany has ordered 60 aircraft, followed by France with 50, Spain with 27, Britain with 25, Turkey with 10, Belgium with seven and Luxembourg with one.

They will replace ageing military transport planes across Europe, such as the US Hercules C-130 and the Franco-German Transall C-160.

The overall project, from research to production, is estimated at about 20 billion euros (23.7 billion dollars).

The contract was signed at the base in Bonn, western Germany, of OCCAR, the organisation representing the seven countries.

It was inked by OCCAR's German director, Klaus von Sperber, and Francisco Fernandez Sainz, the Spanish executive director of Airbus Military, the Airbus subsidiary created for the project.

Richard Thompson, the commercial director of Airbus Military, predicted at least 200 further orders.

"We think a conservative view is 200 aircraft in the coming 15-20 years on top of the 180 already planned, so we are looking at roughly 400 in total.

"It could be even more."

He said there was interest from Canada, Norway, South Africa and Sweden.

The development phase would be carried out at the Airbus site in Toulouse, southern France, and subsequent production concentrated at the Spanish city of Seville.

Airbus Military, whose parent company Airbus is itself 80-percent owned by the European aerospace group EADS, hailed it as "the most ambitious European military procurement programme ever undertaken."

The total project is expected to create or maintain 40,000 jobs in Europe over 20 years, 10,500 of them in Germany alone, with the orders confirmed so far generating an initial revenue of two billion euros by 2005.

The A400M programme has taken seven years to get off the ground, following the withdrawals of Italy and Portugal and reduced orders both from Germany and Britain which brought the initial total down from 196 aircraft to 180.

Tuesday's signing became possible after a German parliamentary commission gave the final go-ahead last week for Berlin's order, which had been cut from 73 aircraft last year due to financial problems.

The A400M, with its four turbo-prop engines, is being billed by Airbus as the world's fastest new-generation aircraft of its kind, markedly cheaper to run than the Transall and with significantly more lift capability.

Capable of flying unrefuelled for 4,400 kilometres (2,750 miles) and at a speed of up to 780 kilometres per hour, it will be a vast improvement on the current generation of transport aircraft.

It will take a maximum payload of 37 tonnes, which could range from heavy armoured vehicles, artillery and helicopters to cargo pallets and troops.

The aircraft is desgined to provide a rapid reaction capability in crisis situations, one of the chief areas which the European Union says it wants its burgeoning military cooperation to concentrate upon.

By developing its own airlift capability, Brussels would no longer have to rely on US-built aircraft if it wanted, for instance, to deploy troops quickly to troublespots around the world.

WAR.WIRE