Airbus seeks compensation from Poland for downed helicopter deal

By bne IntelliNews October 11, 2016

Airbus will seek compensation from the Polish government over the cancellation of talks on a supply deal for military helicopters, an executive from the French aircraft manufacturer said on October 11.

Paris has expressed outrage over Poland's decision last week to end negotiations on a purchase of 50 caracal helicopters from Airbus for a total of PLN13.5bn (€3.13bn). A bad tempered public fight with the company will do little to mend fences.

Poland maintains the French company did not agree to Polish offset proposals and did not present a satisfactory offer of its own. Warsaw now says it wants to give the deal to locally based manufacturers. US Sikorsky and Italy’s Leonardo-Finmeccanica both have factories in Poland.

Airbus Group CEO Tom Enders on October 11 charged the Polish government of misleading the company throughout the talks, which lasted close to a year. “Never have we been treated by any government customer the way this government has treated us,” Enders complained, according to Reuters.

In a separate statement, signed by the CEO of Airbus Helicopters, the French company said it made a number of concessions to meet Poland’s demands, such as agreeing to compensate the VAT imposed on the deal by Warsaw. The value of the offset offer was equivalent to the value of the deal, Guillaume Faury said. He also suggested some of the demands were not in line with the European Union regulations, although he did not offer details.

Poland was quick to dismiss the Airbus claims. “The ending of negotiations with Airbus is fuelling an emotional reaction, that's understandable," Radoslaw Domagalski-Labedzki, a deputy economy minister, told reporters. "I would like to explain the government hasn't broken the negotiations but ended them when we became certain continuing them made no sense. These negotiations lasted a year, long enough to ensure that there was no further room for compromise."

The breakdown of the deal has provoked a high level spat. French President Francois Hollande and Defence Minister Jean-Yves Le Drian cancelled visits to Warsaw which were to take place this week, while France says it will review military cooperation with Poland.

The deal with Airbus had, however, long appeared to be hanging by a thread. The decision of the previous Polish government to award the tender to the French was derided by the current ruling Law and Justice (PiS) party before it took office in November. 

The party claimed handing the contract to Airbus would be a blow to Polish workers. Earlier reports claimed, however, that only Airbus was capable of supplying helicopters meeting the needs of the Polish army, which is undergoing a massive modernisation programme, worth PLN130bn until 2022.

Warsaw is about to make a decision on a medium-range air- and missile-defence system. US companies Lockheed Martin and Raytheon are competing in that race.

The Polish opposition derided the decision to end the talks, arguing it alienates an important ally at a time of numerous crises in Europe and heightened tension in CEE.

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