The £160m sum consists of one £86m payment relating to the settlement of the dispute, and a further payment of £74m to complete Cobham’s Wing Aerial Refuelling podded system programme for the KC-46 as well as to cover rescheduling and costs of further possible delays.
Upon completion of the settlement, Cobham will deliver the refuelling system in mid-2020, following associated flight tests this year.
In 2017, Cobham was forced into a rights issue after making a string of statements that its profits were lower than expected. Last year, Cobham was rocked again by a £40m charge from Boeing for problems with its KC-46 aerial refuelling programme. This charge alone led to a 10% fall in share price in one day.
After the announcement of the latest settlement charge today, however, Cobham’s share price rose from 115.30p per share to 120.35p per share.
Boeing has been developing the KC-46 tanker aircraft under contract with the US Air Force (USAF) to deliver 52 KC-46’s of an expected 179 tankers in total.
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The KC-46 tanker was originally scheduled to be in service with the USAF by 2017 but the troubled programme has suffered from technical and certification delays. Boeing withheld payments for the KC-46 aerial refuelling system to Cobham until the dispute over delays was settled. Boeing itself has forfeited more than $3bn in pre-tax charges relating to cost overruns on the fixed-price KC-46 tanker programme, which has already cost billions of dollars more than expected.
The KC-46 tanker is expected to have a maximum fuel capacity of 212,000lb and the aircraft will be fitted with a flush-mounted air-to-air refuelling receptacle that can transfer fuel at a speed of 1,200 gallons per minute.
In January 2019, the USAF accepted delivery of six KC-46A Pegasus tanker aircraft despite finding a number of technical deficiencies. In response, Boeing agreed to fix the deficiencies at its expense.