The European EADS aerospace group, which controls Airbus, will begin to wind down development of the A400M military transport plane if an agreement on budget overruns is not agreed with partner governments by Monday, a report said here Thursday.

The newspaper Cinco Dias quoted trade union sources as saying that top Airbus executive Tom Enders had made this clear on Wednesday when he visited an Airbus site at Getafe near Madrid.

The report said Enders told union officials that European Aeronautic Defence and Space Company (EADS) chief executive Louis Gallois had written to the governments concerned threatening to begin winding down development if an agreement on big development cost overruns were not found.

The partner governments backing development of the innovative A400M are Germany, France, Britain, Belgium, Luxembourg, Spain and Turkey.

An EADS spokesman, when asked about the report, said talks among the partners were "continuing, with the urgent nature of the situation clear to everyone."

In Paris a defence ministry spokesman, Laurent Teisseire, said France had not received the communication from Gallois mentioned in the report.

He added that the last exchanges with the EADS head last week "showed that like us EADS wants to see an end (to the negotiations) as soon as possible but without reference to a particular date."

Gallois said in Munich, Germany, on Saturday that he expected clarification by "next week" on government financing of the extra costs.

French Defence Minister Herve Morin has said that the seven countries had given EADS until the end of February to conclude negotiations.

The programme to develop the new transport aircraft and produce 180 planes was based on a budget of 20 billion euros (27.6 billion dollars). But development costs have pushed up the budget by more than 5.0 billion euros and the programme is running at least three years late.

The governments have already agreed to provide an extra 2.0 billion euros, and EADS 800 million euros.

If the governments agree to a French proposal to advance another 1.5 billion euros, the remaining funding gap will be about 1.0 billion euros.

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