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Delayed Saudi AH-6is spark new lawsuits between MDHI, Boeing

A batch of helicopters delivered years late and allegedly with parts missing and broken has led to a second legal dispute between MD Helicopters (MDHI) and Boeing, two acrimonious neighbours and former corporate partners in Mesa, Arizona.

MDHI says in the new lawsuit that it supplied airframes for AH-6i helicopters ordered by the Saudi Arabian National Guard to Boeing, but Boeing refuses to pay several outstanding invoices. MDHI has an agreement to supply Boeing with AH-6i airframes, which are derived originally from the MD-530F.

In response, Boeing alleges that MDHI delivered the AH-6i airframes up to three years late and the last airframe was delivered without a Boeing-furnished part, so it is withholding payments until MDHI completes the delivery by supplying the missing part, according to court documents.

Moreover, in a series of counter claims Boeing accuses MDHI of purposely delaying deliveries and supplying broken parts as part of a campaign to “frustrate” sales of the AH-6i and promote its own military version of the MD-500.

MDHI also has instructed its own suppliers for the MD-500 to refrain from supplying similar parts to Boeing for the AH-6i or face repercussions, Boeing alleges in court documents.

MDHI filed a motion on 24 October for the court to dismiss Boeing’s counter-claims, but Boeing has not yet responded.

Both companies seek a judgment from the US District Court in Arizona to cover losses, damages and legal fees. In 2013, MDHI sued Boeing for attempting to block it from offering the MD-540F for a US Army contract. MDHI won the 2013 case in arbitration.

The lawsuit sheds new light on reasons for delayed AH-6i deliveries to the Saudi Arabian National Guard. The aircraft were originally scheduled for delivery in 2014, but only nine of the first batch of 12 had been delivered as of last June. At the time, Boeing said it was keeping three Saudi AH-6is in the US for training. The lawsuit allegedly reveals parts are still missing from at least one of the Saudi helicopters.

“We have been working closely with our customer to manage deliveries of the AH-6i aircraft, given the MDHI delays that are the subject of the current court dispute,” Boeing says in a statement to FlightGlobal. “Boeing has delivered aircraft to the customer and continues to work with that customer to complete the full deliveries.”

The dispute adds further acrimony to a 20-year-old relationship between Boeing and MD Helicopters. It also arises as sales for the two light attack and reconnaissance helicopters at the heart of the dispute – Boeing’s AH-6i Little Bird and MDHI’s MD-500 – move in opposite directions.

The Little Bird faces the end of production after winning only a single order from the Saudi Arabian National Guard for 24 aircraft in 2012. Meanwhile, MDHI won a contract from the US Army in September to supply at least 30 MD-530F Cayuse Warrior helicopters to the Afghan air force, with potential follow-on orders for up to 120 more for other countries.

The fates of the two helicopter types became intertwined when Boeing acquired McDonnell Douglas in 1997. A year later, Boeing sold three commercial helicopter product lines – MD500s, MD600s and MD Explorers – to a Dutch-owned firm named MD Helicopters Holdings Inc. But Boeing retained the intellectual property for a military variant of the MD530F – the MH-6M Mission Enhanced Little Bird, which is operated by US special forces.

In 2005, Patriarch Partners acquired MDHI as the commercial helicopter firm neared bankruptcy. Patriarch owner Lynn Tilton eventually adopted a strategy to rebuild MDHI’s military aircraft sales, putting the company on a course to challenge Boeing’s MELB and the AH-6i derivative that Boeing launched in 2011.

If the lawsuit is not settled out of court, the dispute could lead to a jury trial that on average takes about a year to resolve, a person familiar with the case says.

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