Airbus Wednesday announced that its profits for 2016 were down 63 per cent to 995 million euros (1,046 million dollars) after a major write-off on a troubled programme to develop a new military transport aircraft.

The European aircraft manufacturer charged 2.2 billion euros to its bottom line due to the A400M transporter, which has been hit by a series of problems including refuelling techniques and gearboxes.

It has now written to its six government customers for the aircraft to ask for "mitigation" measures, chief executive officer Tom Enders said.

Cash retentions by customers for the A400M were adding to "an environment that heavily penalizes us," he said, noting that both Airbus and its customers had underestimated the complexity of the project.

"This is a situation where we need to engage, re-engage with our government customers to seek mitigation ... not just to help us, but to help [in] bringing out the aircraft that our customers need," Enders said.

But he defended the aircraft, which analysis firm Janes says has so far been delivered to France, Turkey, Britain, Germany, and Malaysia.

"This is going to be the most sophisticated multipurpose, multimission aircraft that's going to be built for a long time," Enders argued, adding that "we are delivering right now aircraft that our customers can fly into harm's way."

The company had forecast delivery of more than 20 A400M aircraft last year and managed to hand over 17, Enders said, despite being hit by a problem with the gearbox in the propeller engines, which are manufactured by a separate company.

The company nevertheless announced that it planned to raise dividends to 1.35 euros per share, up from 1.30 last year.

The increased dividend "is based on our 2016 underlying performance and it demonstrates our confidence in our future operational cashgeneration,” said Airbus chief financial officer Harald Wilhelm.

Profits before interest, tax and adjustments stood at 3.999 billion euros, down 3 per cent year on year, the company said.

Airbus last month announced that it had delivered a record 688 commercial aircraft in 2016, up from 635 the previous year, although new orders slipped from 1,036 to 731.

The manufacturer has an order backlog of 6,874 aircraft. Enders said that ramping up commercial aircraft production was a top priority.

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