LONDON (Alliance News) - Aerospace and defence firm Cobham PLC said on Thursday it expects to take a GBP40 million hit related to its US KC-46 tanker programme, with Boeing Co currently withholding the payment of invoices.
Shares in Cobham were down 9.8% at 118.65 pence, the stock the worst performer in the FTSE 250 early Thursday.
Cobham said qualification testing on the Centerline Drogue System for the KC-46 tanker has been completed and submissions have been supplied to support achievement of supplementary type certification of the aircraft, with CDS production deliveries having commenced in the period.
In addition, the first Federal Aviation Administration conformed wing aerial refuelling pods were delivered in June to support flight certification testing.
However, while there has been progress on the programme, US aerospace firm Boeing has made "as yet unquantified damages assertions" relating to the programme.
Consequently, Boeing is withholding payment of Cobham's KC-46 CDS and WARP invoices. Cobham said it is formally disputing Boeing's claims.
Additionally, completion of CDS qualification has taken longer and been "more challenging" than expected.
"Qualification of the WARP is in its early stages with risks relating to schedule and cost. Completion could take significantly longer than originally planned, and this increases concurrency risk as well as base cost assumptions," said Cobham.
The latest estimate of the costs expected to complete this will result in a non-underlying charge of GBP40 million against Cobham's interim results.
Nonetheless, the company backed its annual underlying profit guidance. Cobham is due to release interim results on August 3.
