Orbital recovers $1.2m from AAI dispute

Perth innovation and design company Orbital Corporation has reached a settlement with AAI Corporation over a dispute relating to past contracts that resulted in AAI withholding payment on outstanding invoices.

In 2012, Orbital sold its small unmanned aircraft systems engine to the US-based AAI for use in their Aerosonde unmanned aerial vehicle for $12 million.

The engine uses Orbital’s FlexDi technology, which enables spark ignition of military specification kerosene fuels and has been designed to be a lightweight and compact package, enabling increased end-user payloads.

In its most recent half-year financial report, Orbital stated that AAI still owed about $1.6 million for the contract.

Orbital said it believed it had fulfilled its contractual obligations, however AAI was contesting aspects of Orbital’s performance and had withheld payment pending further discussions to resolve a number of open items.

The company expects to recover $1.2 million as a result of the settlement, with the terms confidential.

“Not only will the settlement have a material impact on our financial results and cash flows for the year, more importantly a significant business relationship for Orbital has been restored,” Orbital CEO and managing director Terry Stinson. 

“AAI Textron will continue to utilise Orbital’s patented FlexDi technology through the supply of engine management systems, fuel system components and spare parts, which will be supplied to AAI’s propulsion system manufacturer.”

Orbital designs, manufactures, develops and tests engines and engine management systems. 

Orbital last traded at 15 cents per share at 1:10pm WST.