Cobham Plunges in London After Boeing Withholds Tanker Payments
(Bloomberg) -- Cobham Plc dropped by the most in about 1 1/2 years in London trading after the defense and aerospace manufacturer disclosed that Boeing Co. was withholding some payments in a dispute linked to the U.S. company’s tanker program.
Boeing has made “as yet unquantified damages assertions,” which Cobham is challenging, the Wimborne, England-based company said in a statement Thursday.
Securing some qualifications for the aircraft has taken longer and “been more challenging” than the firm had expected, with further delays and higher costs also likely, Cobham warned in its statement. The aerospace company plans to record an additional 40 million-pound ($53 million) charge due to the expenses and delays in its interim 2018 results, though it expects to announce no change to its underlying profit guidance for this year when it reports six-month earnings on Aug. 3, it said.
Shares of Cobham declined 9.9 percent to 119.55 pence as of 8:43 a.m. in London, after earlier falling as much as 11 percent, its biggest drop since February 2017. The losses erased gains made this year.
Delays to Boeing’s KC-46 tanker had previously accounted for the biggest part of an earnings hit to Cobham for 2016. The U.K. company makes the air-to-air refueling system for the aircraft, which was scheduled for the first 18 deliveries to the U.S. Air Force this year. Negotiations with Boeing culminated last year in an accord that left Cobham to absorb most final development charges for the KC-46 aircraft, Chief Executive Officer David Lockwood has said.
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