Business World

Monday 23 September 2019

Airbus's legal woes grow as it admits inaccurate US arms filings

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Tim Hepher and Cyril Altmeyer

Airbus said yesterday it had uncovered inaccuracies in its filings to US regulators over arms technology sales, drawing the United States for the first time into a scandal over alleged misconduct at Europe's largest aerospace firm.

Airbus also warned about potentially significant fines resulting from existing bribery investigations in Britain and France over the use of middlemen in civil airplane sales, which have triggered a sweeping internal investigation.

But it said it was too early to guess the size or timing of any European penalties, or the outcome of the new US findings.

Shares in the European defence and civil aviation group rose more than 4pc after it posted a smaller than expected drop in third-quarter profits despite jetliner delivery delays.

However the gains were overshadowed by news that Airbus had itself unearthed inaccuracies in past filings to the State Department on defence technology exports.

These involved inaccurate statements made by Airbus under a section of the US International Traffic in Arms Regulations (ITAR), which governs the use of commissions and agents.

Airbus said the flaws were first discovered during an audit at the end of 2016 and were confirmed in an internal follow-up review completed in the third quarter.

Finance director Harald Wilhelm said the European company had not disclosed any secrets about US technology and that the issue was restricted to the use of sales agents and commissions, governed under part 130 of the ITAR rules.

Legal experts estimate Airbus faces fines in the billions because of the scale of suspect paperwork dating back years.

The company reaffirmed its 2017 guidance but acknowledged it would miss an informal goal of 720 jet deliveries that was higher than the official target of 700. Airbus has given different written and verbal delivery targets for several quarters in a row.

The shortfall is chiefly the result of engine delays for the A320neo.

Airbus now expects to deliver fewer than 200 of the aircraft this year, compared with a target of "around 200".

Markets had expected a weak quarter due to delays in commercial aircraft and a build-up of inventory.

Rival Boeing, meanwhile, said it is fixing production problems with its 777 wide-body jetliner but has not stopped production and does not expect the snags to delay deliveries to airlines, it said on Monday.

The US aerospace and defence company said it had given workers more time to catch up on "behind-work" on the 777 assembly line in its massive factory in Everett, Washington.

"Boeing is using extra time in the production schedule to focus on out-of-position work and catch up on jobs that are behind," spokesman Paul Bergman said.

The shifts only affect portions of the production line.

"It's not a line stoppage because the entire line never stopped," Bergman said.

Boeing said it expected the problem to exist for a "relatively short" period but would not say how long it would take to catch up.

The comments follow a report last week on Aviation International News website AINonline that said Boeing had stopped loading fuselage sections for the 777 line and was trying to finish behind-schedule work that had increased in recent months as it installed robotic systems in the factory. (Reuters)

Irish Independent

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