Cobham Awarded FSTA Air to Air Refuelling Contracts Worth GBP150M
(March 27, 2008) -- Further to the announcement today by AirTanker Limited ('AirTanker') that it has secured a 27 year contract with the UK's Ministry of Defence for the provision of an advanced air to air refuelling and transport capability to the Royal Air Force, Cobham plc ('Cobham') is delighted to confirm its role on the programme.
The Future Strategic Tanker Aircraft ('FSTA') programme:
- AirTanker shareholders are Cobham, EADS, Rolls-Royce, Thales UK and VT Group
- The contract is for 27 years with the UK's Ministry of Defence for the provision of an advanced air refuelling and transport capability to the Royal Air Force.
- AirTanker will provide a fleet of 14 new Airbus A330-200 tanker aircraft powered by Rolls Royce Trent engines.
- The aircraft will come into service from 2011, replacing the previous, existing fleet of VC-10 and Tristar refuelling aircraft.
- The contract includes provision by AirTanker Services Limited ('AirTanker Services') of all necessary infrastructure, training, maintenance, flight management, fleet management and ground services to enable air-to-air refuelling and transport missions worldwide.
- A new purpose-built tanker facility and base is to be constructed at RAF Brize Norton in Oxfordshire with building commencing in 2008.
The AirTanker consortium has completed its financing for the programme, raising approximately GBP2.5 billion through a mixture of senior debt, shareholder equity and subordinated debt, for investment in the fleet of new aircraft, and the construction of the new state-of-the-art operational base and associated infrastructure.
Cobham's role in the programme
Each of the FSTA aircraft will be supplied with two wing mounted air refuelling pods and five will be fitted with Fuselage Refuelling Units to enable the FSTA aircraft to refuel large receiver aircraft. All the air refuelling equipment will be supplied by Cobham Mission Systems in Wimborne, Dorset, UK with deliveries commencing in 2010. Twelve of the fourteen aircraft will be converted by Cobham Aviation Services at nearby Bournemouth International Airport, commencing in 2011. The first two aircraft will be converted by EADS in Spain with the support of Cobham engineers.
Cobham has contracts with EADS and AirTanker Services with a total value of some BGP150m for the provision of air refuelling equipment, the conversion of the A330 aircraft tankers and associated through life support.
Cobham's role in the AirTanker consortium
Cobham has a 13.3% shareholding in AirTanker Holdings Limited, the holding company of AirTanker, and a 5% shareholding in AirTanker Services. Cobham's total investment is pound24.4m, provided through a combination of equity and subordinated debt to AirTanker Holdings Limited, structured such that there is a minimal cash outflow. The bulk of the shareholder funding is provided by way of an equity bridge loan, which Cobham is supporting though the issue of letters of credit.
Cobham has provided certain guarantees, letters of credit and associated funding facilities to EADS, AirTanker and AirTanker Services to support the delivery of the services to the Ministry of Defence and to support the subcontracts entered into by its subsidiary businesses. Cobham provides guarantees that are capped at the value of its refuelling equipment and aircraft conversion revenues, and they will reduce as the programme matures.
Cobham will shortly receive approximately pound10m as a cash reimbursement of its bid costs, representing the amount previously expensed, which will be recognised separately in underlying earnings progressively over the next three years as the programme matures.
Allan Cook, Cobham Chief Executive said: "This is excellent news for Cobham and the whole AirTanker team. We have worked hard over the last seven years to get to this position with our customer and I am certain that the RAF will be delighted with the increased level of capability. March has been an eventful month for Cobham with the selection of the Northrop Grumman/EADS/Cobham team for the USAF Tanker and now award of the FSTA contract. The FSTA contract will sustain up to 120 long term jobs in Dorset and underpin our development plans for a new engineering centre of excellence in Wimborne."
Source : Cobham plc
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