Cobham firm on expectations despite Boeing payment delays

Defence and aerospace manufacturer Cobham's shares dropped on Thursday after Boeing withheld payment over the KC-46 aircraft refueling tanker program.

Cobham said that the US aerospace giant has made “as yet unquantified” claims for damages relating to the programme and has withheld payment of Cobham’s invoices for its supply of drogue and wing aerial refuelling pods (WARP) elements of the refueling system, a move which Cobham will formally dispute.

In an update on project progress, a statement from Cobham said steps such as qualification testing on the centerline drogue system have been completed, while federal aviation administration conformed WARP pods were delivered in June to support testing.

Cobham is supplying hose and drogue systems to the project which had Boeing scheduled to deliver the first KC-46 Pegasus tanker to the US Air Force in October. A drogue is the part of the aerial refuelling system which stabilises the hose in flight and provides a funnel to aid insertion of the receiver.

In further news, project delays will mean an estimated additional non-underlying charge of approximately £40m in Cobham's interim results for 2018, which are set for release on 3 August.

However, a statement from the FTSE 250-listed company stressed that no change to its full year 2018 underlying profit guidance should be expected.

Cobham’s shares were down 9.35% at 119.25p at 0852 BST on Thursday.