Cobham Shares Drop Over US Military Tanker Programme

A US military KC-46 tanker aircraft prepares to refuel (Picture: US Air Force).

Shares in Cobham have plunged after the defence and aerospace group revealed a £40 million hit and said Boeing is withholding payments amid a spat over the aircraft giant's US tanker programme.

Shares dropped 10% in the FTSE 250 Index as Cobham said Boeing had made "as yet unquantified damages assertions" relating to the programme and is withholding payment of some invoices.

Dorset-based Cobham said it is disputing the claims.

It also warned some qualifications for the aircraft had taken longer and "been more challenging" to secure than the firm had expected, with further delays and higher costs also likely.

Cobham said this would leave it with an expected charge of around £40 million in its half-year results, which will be reported on 3 August.

But it stuck by full-year profits guidance.

The group has already suffered due to delays over Boeing's KC-46 tanker aircraft, which knocked Cobham's earnings in 2016.

Cobham produces the air-to-air refuelling system for Boeing's tanker aircraft.

It had been scheduled to make the first 18 deliveries to the US Air Force this year.