Bombardier says $340M suit lacks merit
Triumph Group Inc., a supplier of aerospace components, has sued Bombardier Inc. for US$340 million, but the Montreal- based planemaker shot back, saying the lawsuit is “without merit.”
In a court document, Triumph said it had initiated litigation against Bombardier for “failure to pay” expenses Triumph incurred during the development phase of the company’s Global 7000 business aircraft.
“The l awsuit s eeks a monetary award of approximately US$ 340,000,000 ( or CAD$455,000,000) resulting from Bombardier directed changes to the original wing requirements for the Global 7000 program, as well as Bombardier’s, delays, disruptions, acceleration and interference in connection with its contract with Triumph Aerostructures,” the company said in a court document submitted to the U. S. Securities & Exchange Commission on Dec. 22, 2016.
Bombardier spokesman Mark Masluch told the Financial Post on Thursday the lawsuit was “without merit” and the company will defend its position against Triumph.
The claim relates to the design and development of the wing that for the most part is complete and undergoing flight validation, Masluch said.
“At the appropriate time, Bombardier will assert its major claims against Triumph for losses sustained due to the program schedule revision announced in July 2015,” Masluch told the Financial Post in an email. “Bombardier’s delay claims will exceed the value of the claim filed by Triumph.”
Masluch s aid despite the companies’ disagreements, they remain focused on working to build wings to support the Global 7000 program.
“Our collective focus remains on achieving EIS in 2018 and this dispute does not impact our ability to do so.”
Bombardier’s shares were down around three per cent on Thursday afternoon in Toronto to $ 2.46, while Triumph’s stock fell 4.5 per cent to US$27.30 on the New York Stock Exchange.
In a note published earlier on Thursday, CIBC raised Bombardier’s target price to $ 2.50 from $ 2.25, noting that the company has benefited from improved execution by streamlining its program development, reducing its overhead, and leveraging existing technology.
However, analysts Kevin Chiang and Khaled Omar warned the company is still battling uncertainties.
“While Bombardier’s new management team has pulled the company out of the abyss, there remains a significant number of unknowns,” the analysts said.