Airbus Seeking Arbitration in Hawker Beech Dispute

 - May 14, 2009, 7:07 AM

In Hawker Beechcraft’s (HBC) 10-Q quarterly report that was released last week, the Wichita-based company revealed that it is engaged in a dispute with Airbus over manufacture of Hawker airframe components. According to Hawker Beechcraft’s SEC filing, the European aircraft manufacturer submitted a request for arbitration, alleging “that [HBC] breached its obligations under the airframe purchase and support agreement dated Aug. 19, 1998.” The document explains that “Airbus claims” that the two companies agreed in April 2008 for HBC “to purchase increased volumes of fuselages, wings, track kits and spare parts in the 2008 to 2010 time frame.” This could reflect the growing backlogs that most aircraft manufacturers were enjoying early last year before the aerospace industry saw a significant decline. In the 10-Q filing, Airbus said it invested substantially to “expand its production capacity” to meet the demand from HBC, but that HBC “unilaterally reduced the number of shipsets that it would purchase in breach of its contractual obligations.” The 10-Q states that Airbus is seeking damages of more than $60 million. HBC told AIN that it doesn’t comment on litigation. The 10-Q said that HBC will respond to the request for arbitration in the middle of this month.