However, a German official said the intention was to press on with the programme and French Defence Minister Herve Morin said France, one of the countries involved in the project, was not ready to ditch it.

EADS head Thomas Enders reportedly told a group of Airbus directors last month he "no longer believed in pursuing the programme" and had begun to prepare for it to be terminated, the Financial Times Deutschland (FTD) said.

Lists of engineers to be transferred from the A400M to the development of two other key aircraft, the A380 superjumbo and the A350, have already been drawn up, the newspaper added.

The German defence ministry, however, said it aimed to continue with the programme and hoped talks could still be wrapped up the end of the month.

"We ... will continue to clarify the necessary details for a continuation of the programme with the industry until the end of the month," a ministry spokesman said.

He added that state secretaries from the seven countries planning to buy the plane were due to meet in mid-January.

In France, when asked about the report of the project's demise, Morin said: "I don't foresee it but I also don't foresee that the European taxpayers will pay for all of the additional costs" from the programme.

"France is ready to play a part but ... France is not alone," he told BFM radio, adding that the project partners would meet on January 20.

An Airbus spokesman said it hoped to wrap up the A400M negotiations "positively and constructively" by January 31.

Airbus and its parent group, the European Aeronautic Defence and Space Company (EADS), have been in discussions over cost overruns for several months with the seven countries.

The A400M project was first agreed in 2003 by NATO members Germany, Spain, France, Britain, Turkey, Belgium and Luxembourg.

A total of 120 aircraft had been ordered for around 20 billion euros (29 billion dollars) but clients are being asked to put up billions more to cover unexpected costs.

Deliveries are at least three years behind schedule and there have been reports that Airbus needs another five billion euros to finish the project.

The Financial Times Deutschland said Enders estimated the chances of reaching an agreement at around 50-50.

Enders "is not ready to threaten the civil aviation division, which is doing well, just for the A400M," a source close to the matter was quoted as saying.

The plane made its maiden flight on December 11 in Spain.

An aeronautics industry expert at the private German Economy Institute, Klaus Heiner Roehl, said Enders's comments could be understood as a threat to the governments backing the programme to step up their support.

"It would of course be complete nonsense, now that the maiden flight was a success, to back out," he told German rolling news channel N-TV.

-- Dow Jones Newswires contributed to this report --

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