An arbitrator's decision to award Delta aerospace manufacturer Avcorp US$27.4 million in damages from Textron Inc. (NYSE:TXT) subsidiary Cessna Aircraft Co. will stand, a U.S. court decided May 2.
The U.S. District Court for the District of Kansas affirmed the November arbitration ruling, which awarded the money to Avcorp because of Cessna's decision to reclaim work in 2010 that it had contracted to Avcorp.
The court also awarded interest at an annual rate of 10% from December 16, 2012, a finding that so far awards Avcorp approximately $1 million in addition to the damages.
The arbitration panel had found that Avcorp and Cessna had an agreement that set out how Cessna would be eligible to reclaim work. The decision held that Avcorp kept its end of the agreement but Cessna had not.
Avcorp started making parts for Cessna Citation CJ3 business jets in 2005. By 2010, the Cessna work comprised almost 40% of Avcorp's revenue.
Avcorp designs and builds airframe structures for companies such as BAE Systems, Boeing and Bombardier. It employs approximately 400 people in 354,000 square feet of facilities in Delta and Burlington, Ontario.
