Cobham takes £160m hit after settling Boeing dispute
Defence firm Cobham has said it will take a further £160 million hit after settling a spat with Boeing over the aerospace giant’s troubled US tanker programme.
Shares in Cobham rose 2% as it said Boeing was no longer withholding payments against Cobham invoices after resolving the aerial refuelling dispute.
Dorset-based Cobham’s charge comprised £86 million for the settlement and £74 million for additional costs to complete the retained contract.
Cobham had already taken a £40 million charge over the dispute in July last year.
The firm said it will offset the £86 million in damages due against invoices previously withheld by Boeing worth £37 million, meaning it will make a £49 million payment to Boeing in the first half of 2019.
Cobham added it now expects qualifications and production of its fuel delivery system to complete around the middle of 2020, with flight tests in the first half of this year.
Shares in Cobham had plunged when Boeing’s damages claim first came to light last July.
Cobham had already suffered due to delays over Boeing’s KC-46 tanker aircraft, which knocked Cobham’s earnings in 2016.
Cobham makes the air-to-air refuelling system for Boeing’s tanker aircraft.
Boeing had been scheduled to make the first 18 deliveries to the US Air Force in 2018, but the programme has been beset by problems for some 10 years.