A €20 billion (£18.3 billion) project to build military transporter aircraft for Nato risks being scrapped next month, EADS, the aerospace group, warned today.

The admission raises the prospect that the group, which also owns Airbus, could be hit by huge fines as demand for aircraft evaporates amid the steep economic downturn.

Louis Gallois, the chief executive of EADS, admitted that 2009 “will be a very difficult year for us”.

EADS warned that the A400M project, which has been plagued by delays of up to four years, could be cancelled altogether if all seven nations supporting it pull out, as they have the right to do, on April 1

Such a move, which Mr Gallois insisted was “very unlikely”, would cost the group €5.7 billion in repayments to European governments, including Britain.

He suggested that rather than a complete cancellation, a more likely scenario was that, with military budgets under pressure during the economic downturn, a number of nations could terminate individual aircraft orders, raising the prospect of further "significant charges" for EADS.

The A400M programme has long been hampered by concerns that the aircraft is too heavy and has struggled to meet a key performance criterion — the ability to lift 32 tonnes of military equipment, roughly the weight of a modern armoured infantry fighting vehicle.

EADS has also blamed the delays on the manufacturers of the aircraft's huge propellers — some of the largest in history — although its suppliers deny this.

EADS said that problems with the A400M had cost it €704 million in 2008.

The warning emerged as EADS unveiled better-than-expected results.

Shares in the company rose by 1.62 per cent in early trading in Paris after it surprised analysts with a pre-tax profit of €2.83 billion (£2.6 billion) last year, up from €52 million in 2007.

Its aircraft manufacturing division registered an operating profit of €1.79 billion last year after a loss of €881 million in 2007.

The unit recorded 777 orders last year, and expected between 300 and 400 orders this year.

Mr Gallois said that, despite the troubles with the A400M, he expected the company to remain in profit this year, although at a lower level.

Times Recommends

• Toyota recalls 437,000 cars including Lexus
• Myners says bonuses are bleeding pension funds
• Japanese company faked safety reports on seats