HBC’s Dispute With Pilatus

As Hawker Beechcraft Corp. (HBC) tries to find its way out of bankruptcy, it finds itself in a dispute over one of its most successful programs – its T-6/AT-6 military trainer.  The trainer, based on the Pilatus PC-9, has been the cornerstone for HBC’s military business and one of the few positive programs during the prolonged market downturn. It also is the platform for the U.S. Air Force’s Light Air Support program that HBC has been fighting to win.

But since going into bankruptcy, HBC apparently has suspended royalty payments to Pilatus, prompting the Swiss manufacturer to file a claim to the U.S. Bankruptcy Court for the Southern District of New York seeking immediate restart of those payments, along with catch-up payments.

Pilatus says HBC is still making money on the aircraft and therefore should continue to pay royalty money since the aircraft uses Pilatus intellectual property.  HBC says that isn’t necessarily the case. Royalty payments were not for use of intellectual property but for a complex settlement agreement made in 2004 between the two companies, HBC argues.

The court has scheduled a hearing for Aug. 30 on the case.

But the dispute throws one more wrench into HBC’s attempt to vie for the LAS contract, which originally was awarded to Sierra Nevada for an Embraer platform.  HBC was able to convince the USAF to rebid the contract.


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