EU to go ahead with Galileo satellites, says official

"Galileo is an essential project," he said at a news conference. "We don't have an option of giving up. Whatever problems may have arisen, Galileo remains essential for Europe."

Concerned about slipping deadlines and a lack of coordination, the European Commission last month gave the eight companies picked to build and run Galileo a May 10 deadline to create a single company and choose a chief executive to head it. Galileo is Europe's answer to GPS (global positioning system), the U.S. satellite navigation system.

At the time, Jacques Barrot, the commissioner for transport, said there was also a risk of "significant cost increases which could go well beyond the foreseen budget."

Verheugen said Thursday that the issue concerning Galileo now is money. "The question is how much public money is needed to ensure that we get a reliable, efficient satellite navigation system," he said.

The Commission will announce new ideas for the public-private partnership behind Galileo after the May 10 deadline.

The commercial viability of Galileo was questioned late last year when it emerged that a satellite system being developed by China would compete with Galileo in some commercial markets. Last month the Commission denied that the development had anything to do with the current problems besetting Galileo.

The companies in the Galileo consortium are EADS, the Franco-German parent of Airbus, Thales and Alcatel-Lucent from France, Inmarsat of the U.K., Italy's Finmeccanica, Aena and Hispasat from Spain and a German joint venture led by Deutsche Telekom.

Galileo is intended to be a more accurate version of the GPS system currently used and is designed solely for civilian use. By contrast, the GPS system can be shut down by the Pentagon when the U.S. military needs it.