By Tim Hepher and Sarah Morris
PARIS/MADRID (Reuters) - Shares in Airbus Group (PA:AIR) fell on Monday after the fatal crash of an A400M military plane weighed on Europe's largest and repeatedly delayed defense project, while the planemaker pledged to overcome the tragedy.
The huge military plane crashed outside Seville on Saturday, killing four crew and prompting Britain, Germany, Malaysia and Turkey to ground their fleets of Europe's new troop and cargo carrier..
France said it would keep flying its planes, while Airbus pledged to resume flight testing on Tuesday with the head of its military aircraft business, Fernando Alonso, on board.
There was no official word on the cause of the crash but investigators' attention was expected to focus partly on the plane's turboprop powerplants. Germany's Der Spiegel magazine reported that one of the survivors had said the plane suffered "multiple engine trouble" shortly after takeoff.
A source familiar with the matter confirmed that engines were one of the areas under scrutiny following the testimony but stressed it was too early to say what had caused the crash, with the crucial black box flight recorders yet to be analyzed.
Airbus declined to comment. "We have to wait for the results of the investigation," a spokeswoman said.
Shares in Europe's largest aerospace group, which hit a record high in April, fell as much as 4.5 percent before closing at 62.09 euros, down 2.1 percent.
The A400M Atlas was developed for seven European NATO nations -- Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey -- at a cost of 20 billion euros ($22 billion).
So far Malaysia is the only export customer.
The plane entered service in 2013, more than three years behind schedule, and just 12 of 174 aircraft sold have been delivered.
Problems in the development of the West's largest turboprop engines helped to generate billions of euros of cost overruns and a bailout by the seven launch nations in 2010.
New technical problems with A400M military features surfaced last year, leading to fresh delays and a management shake-up.
People with direct knowledge of the matter have said the plane suffered engine problems on its maiden flight in December 2009, delaying its landing in front of hundreds of VIPs.
The engines were supplied by a European consortium of Britain's Rolls-Royce (L:RR), France's Safran (PA:SAF), MTU Aero Engines of Germany (DE:MTXGn) and Spanish aerospace firm Industria de Turbo Propulsores (ITP).
The consortium was picked after European politicians objected to Airbus's proposal of an imported engine from Canada.
MTU, which had borne the brunt of criticism over the earlier development problems, declined to comment on Spiegel's report.
FRESH CONCERN
Analysts said the first A400M accident raised fresh concerns about deliveries and long-term exports of the plane, but Airbus Group chief executive Tom Enders reaffirmed the company's commitment to the program as he paid tribute to the crew.
In a letter to staff seen by Reuters, Enders said testing would resume as planned on Tuesday to "demonstrate to our customers, the air forces, that we fully trust this great transport plane and are as committed to the program and the further ramp-up of deliveries and capabilities as ever."
Enders asked the company's 137,000 employees to observe a minute's silence for the captain, co-pilot and two test engineers who died in the crash. Two others remain in hospital.
"The men who lost their lives in Sevilla were great professionals; they knew about the risks of their job and they would not want us to stop flying," he said.
A memorial service was expected to be held in Seville's cathedral on Tuesday.
In February, Airbus took 551 million euros in charges for the latest A400M delays, bringing the total company charges over the lifetime of the project to more than 4.75 billion euros.
"Airbus can ill afford more delays," Hamburg stockbroker Berenberg said in a note.
"Longer-term, this latest development will almost certainly hamper the ability to sell A400M in the export markets, the only way this program will ever make any money."
People close to the project expressed concerns over the impact of the crash on morale in the Spanish production plant.
The crashed aircraft was due to be delivered to Turkey and was on its maiden test flight when it plowed into a field one mile (1.6 km) north of Seville's San Pablo airport.
Alonso, the newly promoted head of Airbus Group's military aircraft business, said Airbus stood ready to assist investigators following the recovery of two black boxes.
"At the same time we will give our total support to the investigating authorities and urge them for initial results as soon as possible," Alonso said in a staff memo.
But the status of the investigation remained uncertain, with conflicting reports about who would be responsible for the probe. Three sources said the black boxes were being held by judicial authorities, delaying a start to the enquiry.
A person briefed on the matter said late on Monday that the Spanish government had commissioned the country's military authorities to carry out the crash investigation.
(This story has been refiled to add dropped reference to closing shares)