(Reuters correspondents worldwide are looking this week at how recession and changing threats are affecting the global arms trade. For highlights, please double-click on [ID:nARMS])
* Missing software logs threatened top European arms project
* A400M problem went wider than just engine software
* Threat to poach UK jobs if Britain abandons plane
By Tim Hepher
PARIS, June 12 (Reuters) - The jinx surrounding Europe's unfinished and costly A400M military transport plane all started at the Paris Airshow eight years ago, when red-faced aides mixed up the papers for European defence ministers to sign.
Instead of appointing Airbus as preferred bidder to build a new-generation transporter for their own armies, the politicians were asked to pull out their pens to sign the wrong contracts -- until scurrying hands intervened to correct the gaffe.
It was a bad omen for a project now gone horribly wrong. Nearly a decade later, another apparently simple mishap over documentation has brought the 20 billion euro project led by Airbus to its knees, and divided European leaders on the eve of the latest biennial air jamboree at Le Bourget, outside Paris.
It has contributed to a four-year delay and potentially huge
penalties for Airbus parent EADS
As European buyers extend a moratorium on cancelling the plane to allow another six months of talks [ID:nLB787214], the aircraft risks entering the history books as the 'A400-When?'
That is not how it seemed a year ago in Seville when the first plane was rolled out in triumph before the King of Spain.
Just 12 weeks later the company and its engine makers were in turmoil after inspectors from a new European safety agency turned up to do an audit on the documentation of key software.
According to one source familiar with the matter, it was a moment of blinding recognition that something was wrong.
"They just looked at it and said, 'It is impossible, you can't do this'. And the whole thing had to start again."
The blow came on top of engine problems but was potentially more severe. The aircraft was put into hibernation and forensic teams of software certification experts were drafted in to help.
Experts in secret military design, developers had failed to log their every move according to formats set by the European Aviation Safety Agency, according to sources in the post-mortem.
The civil agency is involved because it was the only outfit available to rule on airworthiness for all buyers, saving cost.
Most attention has focused on the way the plane talks to the
turbo-prop engines through a software system called the FADEC,
supplied by German engine maker MTU
But developers have told Reuters that drastic action also had to be taken to repair software logging problems throughout the plane's sub-systems, feeding into main aircaft computers.
"The plane is an over-complex beast. It was realised too late," said a person familiar with the aircraft.
EADS has recognised its own organisation was also to blame.
UK AEROSPACE "FINISHED" IF DEAL COLLAPSES
Britain has threatened to pull out over delays but European diplomats say the other six buyers -- France, Germany, Belgium, Spain, Luxembourg and Turkey -- seem resolved to go ahead. The seven European NATO countries ordered a total of 180 aircraft.
How all that is solved could have far-reaching consequences for Europe's fragile attempts at defence coordination and affect future placement of thousands of jobs in aerospace, not only for war but also in the big Airbus civil jetliner plants.
Europe's needs are set out in a six-year-old security paper that ticks off most imaginable threats, from insurgents to unfriendly states. Transforming the vision into kit capable of backing every competing national mission was never an easy task.
The A400M aircraft is designed for strategic airlift, steep descents into the battlefield or serving the fleet as a tanker.
EADS wants purchasing countries to prioritise their needs. Ground-hugging capability has already been put on hold.
Industry experts say another root cause of problem was protectionism over jobs that led to clumsy decisions over what should be developed where, regardless of where expertise lay.
Yet now, recession and job fears ahead of German and British elections in the coming year could come to the project's rescue.
Britain has been left in no doubt that aerospace means jobs.
"If Britain cancels the A400M, its whole aerospace industry is finished," said an official with another country directly involved in the talks, asking not to be named.
Britain is home to wings manufacture for all Airbus jets, one of its key high-tech industries employing 11,000 people.
Workshare -- a code word for national haggling over who builds what -- is not yet set for the A350, a 10 billion euro jetliner project now starting up, industry sources point out.
But a more likely battleground may be a plane not yet even on the drawing board -- a future replacement of the single-aisle A320, which could take start to shape late next decade.
Although there is no acknowledged link between the A400M and civil investment, the A320 is being floated as the one to watch since it would need carbon wings similar to those on the A400M.
Airbus does not need to spell out to UK mandarins what that means. The A320 is a spigot for investment and jobs. At least one rolls off the company's European production lines every day. Nearly 4,000 of the planes are in operation worldwide.
Britain may yet decide this is a bluff. Moving production is costly and restructuring has reinforced factory specialisation.
So-called "soft capability" such as decades of expertise in the wind tunnels that designed Concorde would be hard to shift.
"It would be extremely costly because of the way programmes are structured. Tooling is specific to facilities," said a top executive with a rival aerospace firm.
"Anything can be done. But is it worthwhile? Probably not."
(Editing by Sitaraman Shankar)