Search

Aircraft Parts Manufacture

United States

Assessment of complex damages in a dispute between an alloy supplier and aircraft manufacturer.

Following cracking found in parts manufactured for a passenger airliner, the aircraft company alleged that the alloy materials provided were sub-standard and claimed against the supplier for various costs running to several hundreds of millions of dollars.

Brief

The legal counsel for the materials supplier – which contended that its alloys met the client’s specification – retained HKA to provide expert analysis and opinion on the aircraft manufacturer’s complex damages claim.

What we did

The claim comprised costs allegedly arising from investigating the causes of the cracking, developing modifications and methods to fix the problems, and the implementation of these solutions. These losses would amount to hundreds of millions of dollars.

The work done for our initial expert report involved:

  • Verifying which historical costs were actually incurred
  • Ensuring that these costs related to the alleged defects
  • Detailing omissions and weaknesses in the claim’s preparation

Our first joint expert statement agreed the need to analyse a sample of the historical costs claimed and all relevant documentation available to evidence the costs to invoices and payments.

Having shown that a significant proportion of labour and other costs were inflated, unsupported or otherwise unreliable, our damages expert – working with forensic accountant colleagues – also investigated the claims concerning future costs for modifications and refitting of aircraft.

In view of the profound impact of the COVID-19 pandemic on the aviation market, it was necessary to question many of the assumptions regarding projected demand for refits.

At the virtual hearing, held during 2020, our expert provided testimony, which included ‘hot tubbing’.

The experts advised the ICC tribunal that preparing a model to help the panel determine the amount of damages would be a complex task due to the many variables and uncertainty involved. It was agreed that this should be deferred until after judgment, to avoid abortive work.

Outcomes

The HKA team identified significant deficiencies in the documentary evidence for the claim and made clear the high level of risk that the projected implementation costs were overstated.

The tribunal found that the alloy supplier was not liable.

Project Details
  • Client
    Confidential
  • Year
    2020
  • Value
    Hundreds of millions (US$)
  • Services
    Forensic Accounting & Commercial Damages
  • Sectors
    Industrial & Manufacturing