The offer "is definitely an important step towards convergence, but it is not a contract draft," the company said in a statement, adding that it would seek "clarification" on several points.

EADS said Tuesday it was studying an offer from partner governments that could rescue the A400M project, which is three years behind schedule and a reported 11 billion euros (15 billion dollars) over budget.

It did not give details but the Financial Times Deutschland reported that the seven countries had offered two billion euros in additional financing and 1.5 billion euros in credit guarantees.

The European Aeronautic Defence and Space Company (EADS) has threatened to pull the plug on the project unless the seven NATO countries that have ordered 180 of the aircraft for 20 billion euros stump up more cash.

Germany and France are the project's biggest customers, with 60 and 50 orders respectively.

Negotiations are focused on the financing of 5.2 billion euros in cost overruns.

EADS said it was ready to put up 800 million euros on top of the 2.4 billion euros that it has already invested in the military carrier built by its subsidiary Airbus.

That would still leave a shortfall of 900 million euros.

"The company cautions that it is too early to draw financial conclusions yet," said the EADS statement.

French Defence Minister Herve Morin told journalists that he would be disappointed if a final deal could not be reached at a defence ministers' meeting next Wednesday in Mallorca, Spain.

"Matters are progressing nicely," said Morin, adding that "the ball is now in EADS's camp."

He said a majority of the partner countries "accept the idea" of credit guarantees of between 1.0-1.5 billion euros but must decide how to share the burden. France is putting 400 million euros on the table.

Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey are backing the project for the highly innovative aircraft, which can carry troops, armoured vehicles and helicopters.

Morin said the A400M project would generate 40,000 jobs directly and indirectly and determine whether Europe "can be present in the niche of military transport planes without relying on Americans."

France has "done everything it could to save this programme," he added.

The A400M, built to replace ageing military cargo carriers in several European air forces, carried out its first test flight in Spain in December.

With a list price of about 100 million euros, the A400M can fly as high as 40,000 feet (12,000 metres) and can land on short, unprepared runways.

Airbus chief executive Thomas Enders said in a newspaper interview to appear on Thursday that the A400M would be a major burden for many years.

"Even if we reach an agreement to continue the A400M programme - and I am optimistic about that - the programme will nonetheless represent a major burden for many years," Enders told the German daily Die Welt.

A400M deal near after loan offer
Paris (UPI) Feb 17, 2009 - The seven partner nations of the Airbus A400M transport plane offered an additional $2 billion in credit guarantees to save the troubled project.

The loan offer would come on top of around $2.7 billion partner nations pledged to shoulder part of the cost overruns linked to the delayed plane program. It's the latest compromise in weeks-long negotiations between plane maker and partner countries.

Airbus parent European Aeronautic Defense and Space Wednesday called it an "important step toward convergence" to continue producing the plane but added it would seek "further clarification" from partner nations.

While observers say a final agreement for the extension of the A400M could be expected soon, it was unclear whether the credit guarantee offer was backed by all partner nations.

German business daily Handelsblatt reports that Britain, which has also ordered Boeing's C17, is against the loan offer tabled by France and Germany.

"The new offer is a step forward but we are not yet done," the daily quotes an official of EADS as saying.

The A400M, Europe's biggest military project, is nearly four years late and $15 billion over budget.

Airbus at the launch of the program agreed to a fixed price and delivery date and it can't meet either of them.

While nations are generally unwilling to pay for Airbus' mismanagement with taxpayers' money, they are also eager to save the estimated 10,000 jobs linked to the program.

Germany, France and Spain, together with Belgium, Luxembourg and Turkey have ordered 180 of the A400M planes. They were scheduled to be delivered in 2009, a date that has already been pushed back to 2013.

Abandoning the A400M would mean Airbus would have to pay back nearly $8 billion in funding to the governments. The company is pumping around $100 million a month into the program because it has not agreed with the partner governments over its extension.

Yet EADS also says it will lose more money if it continues the program with inadequate additional funding from governments.

The partner countries desperately need a new freighter plane: Britain is eager to modernize its fleet of Hercules and Boeing C-17 carriers, worn by the mission in Afghanistan; and France and Germany want new transport planes to replace their 4-decade-old C-160 Transall machines, which are slow and inflexible.

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