A legal dispute between Boeing and Teledyne Ryan Aeronautical over production of the Boeing AH-64 Apache fuselages is expected to move to arbitration after a US district judge recommended the case should be settled out of court.

The move follows the filing of a law suit by Teledyne Ryan over Boeing's decision to take Apache fuselage assembly work away from its San Diego factory in California. To date, the fuselage of every Apache has been built at the site under an agreement dating back to the design of the original airframes by Hughes Helicopters. The agreement was extended when McDonnell Douglas bought the Hughes operation. Teledyne adds: "Our contention is that Boeing must honour that written agreement in the same way."

Under the revised Apache production plan, Boeing now intends to terminate its agreement with Teledyne at the end of the year after the construction of 13 AH-64D Longbow Apache airframes, plus a further 10 airframe kits. Production will then be transferred to Boeing's old Vertol manufactuing site in Philadelphia. Teledyne Ryan has so far built 946 AH-64A fuselages and the three "D" models, two of which are for the Netherlands and one for the UK.

Although the two companies are tightlipped over the legal wrangle, Boeing says "-the judge has recommended this, so things will progress in that direction". Arbitration will be conducted through a third party.

Boeing also dismisses rumours that it plans to move all Apache work from Mesa, Arizona, to Philadelphia. "It is a very, very remote possibility, but it has not been discussed seriously," it says.

The dispute coincides with new developments in the sales campaign in Kuwait. A sales agreement, believed to cover up to 16 AH-64Ds, is now being processed by the US Army for minor changes before being passed back to Kuwait for approval. The deal would take export sales to 113 helicopters.

Source: Flight International