After nearly four hours in the sky, the hulking grey plane and its six-man crew landed at an airport near the southwestern city of Seville to applause from hundreds of officials, including Spain's King Juan Carlos.

The A400M was first agreed in 2003 by NATO members Germany, Spain, France, Britain, Turkey, Belgium and Luxembourg with a contract worth 20 billion euros (28 billion dollars).

But deliveries are at least three years behind schedule due to a series of serious technical problems, in particular delays in building its massive turbo-prop engines, and media reports say Airbus needs another five billion euros to finish the project.

The maiden flight was first scheduled for 2008 and air forces were to take their first deliveries at the end of 2009. The first deliveries are now not expected until at least early 2013.

Louis Gallois, head of Airbus parent company EADS, acknowledged the project had overrun its budget but would not say by how much.

"It is not a small amount, if it was a small amount the problem would be easy to fix," he told AFP.

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

It has four 11,000 horsepower turbo-props that are the most powerful ever made outside Russia and can carry two attack helicopters or 116 soldiers.

The seven countries have ordered 180 planes, in most cases to replace elderly Transall and C130 Hercules transports. But many are tiring of the delays.

South Africa has already pulled out of a multi-billion dollar deal. Britain has also mulled switching its business to US manufacturers and has insisted on at least a renegotiated contract.

France and Germany have given Airbus until the end of the year to prove that the A400M remains viable.

The seven partner nations have been in talks with EADS on a new deliveries schedule and price accord since March when the firm breached its contract by missing a key deadline to fly the aircraft.

The talks are crucial for EADS, which has already put aside 2.4 billion euros in provisions against losses on the A400M and has not excluded new charges.

Fabrice Bregier, a member of the EADS executive board, told French business daily La Tribune, that the consortium nations would have to accept a "significant" higher price but that he hoped a new deal would be agreed by the end of 2009.

Airbus could also keep the price but reduce the number of aircraft that will be made or change the specifications, analysts said.

French Defence Minister Herve Morin said the "effort" to absorb the cost overrun "should be shared".

"It is a great day but it is not enough that the A400M flies, the seven partner nations of this programme must also reach an agreement with EADS," he added.

Thousands of production jobs in Europe are at stake at a time when airlines are facing their worst travel stumps in decades.

The effort needed to resolve problems with the A400M, coming after delays with its A380 superjumbo, is also taking away cash and resources from the development of new models intended to compete with Boeing.

"This first flight, even if it does not solve all the problems weighing on this programme, will nevertheless be a major step forward," said an analysis by CM-CIC investment group earlier this week.

South Africa dropped its order last month -- a move which stunned Airbus -- because the agreed cost of 1.2 billion dollars five years ago had grown to 6.1 billion dollars.

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