According to the reports of a Spanish daily, Europe's EADS aerospace company is set to halt work on its troubled A400M military transport plane if an agreement on budget overruns is not

reached this week.

The Cinco Dias daily sourced trade union officials as saying the top executive of Airbus, which EADS controls, relayed the threat during a recent visit to the Airbus site at Getafe near Madrid.

 Airbus Chief Executive Officer, Tom Ender, was reported to told union officials that Louis Gallois, the chief executive of European Aeronautic Defense and Space Company had sent off

letters to the governments involved in the A400M project, threatening to scale down development if agreement on funding was not reached by Monday.

Germany, France, Britain, Belgium, Luxembourg, Spain and Turkey are the partner governments of the project.

Airbus has refused to comment but a spokesman of EADS said the ongoing talks between the involved nations were of "urgent nature."

The A400M is Europe's biggest military project but years behind schedule, costing the company nearly $150 million a month in overruns.

Germany, the biggest customer of the A400M, has ordered 60 units but Chancellor Angela Merkel is resisting revisions in the deal.

Instead, senior government officials said this week that Germany was considering loans as an option to fund extra costs for the A400M military transport plane program.

Germany's defense minister was planning to finance more than $1billion in extra costs for the controversial project through guarantees from the country's "Germany Fund" as well as through

credits from the government-owned KfW bank, reported newspaper Handelsblatt.

The "Germany Fund" is the German government's bailout fund for companies.

Alternatively, other defense ministers from European countries that have placed orders for the transport plane have proposed cutting the number of planes to be delivered, than axing the program. (With Input from Agencies)