£50m impairment warning after manufacturer ejects from business jet programme

Engineering group Meggitt has warned investors it may face a £50m impairment after the cancellation of a business jet programme.

Dassault Aviation has scrapped the planned Falcon 5X, which was due to come into service in 2020, after more problems with the French-built Silvercrest engines.

Meggitt had agreed a multi-million-dollar deal in 2013 to supply the braking and control systems. Its aircraft and braking system business is based in Coventry, and last month the group announced a £130m investment in a new site at Ansty Park that would be home to 1,000 staff.

Dassault will replace the Falcon 5X programme with a new Falcon programme featuring the same cross section with an expected entry into service of 2022. The engines will now be supplied by Pratt & Whitney Canada.
 
Meggitt has been told that Dassault “expects to re-use a maximum of work undertaken to date on the Falcon 5X and that it intends to work with Meggitt on the successor Falcon programme”.

However in a statement to the stock market, Meggitt said: “It remains possible that the cancellation of the Falcon 5X programme could lead to a non-cash impairment of some or all of the capitalised work undertaken to date.”

Meggitt currently has £50m of assets relating specifically to the 5X programme, and a further £11m of assets relating to the Silvercrest engine on its balance sheet.

However, Meggitt does have “good content” on the Pratt & Whitney PW800 engine, which is expected to be used on the new Falcon programme.