DORSET’S defence firm Cobham has said it will take a further £160million hit after settling a spat with Boeing over the aerospace giant’s troubled US tanker programme.

Shares in Cobham rose two per cent yesterday as it said Boeing was no longer withholding payments against Cobham invoices after resolving the long-running aerial refuelling dispute.

Wimborne-based Cobham’s charge comprised £86m for the settlement and £74m for additional costs to complete the retained contract.

Cobham had already taken a £40m charge over the dispute in July last year.

The firm said it will offset the £86m in damages due against invoices previously withheld by Boeing worth £37m, meaning it will make a £49m payment to Boeing in the first half of this year.

Cobham added it now expects qualifications and production of its fuel delivery system to be completed around the middle of 2020, with flight tests expected to take place in the first half of this year.

Shares in Cobham had plunged when Boeing’s damages claim first came to light last July.

Cobham had already suffered due to delays over Boeing’s KC-46 tanker aircraft, which knocked Cobham’s earnings in 2016.

Cobham makes the air-to-air refuelling system for Boeing’s tanker aircraft.

Boeing had been scheduled to make the first 18 deliveries to the US Air Force in 2018, but the programme has been beset by problems over a period of some 10 years.

Founded by Sir Alan Cobham as Flight Refuelling in 1934, Cobham employs almost 1,000 people at its Wimborne factory and has another site, Cobham Special Mission, at Bournemouth Airport.

Visiting the Wimborne site last year, defence secretary Gavin Williamson said Cobham showed the importance of defence to the economy. Mr Williamson said the UK needed to invest in the “people that make our country safer”.

“This is just a brilliant example and just demonstrates how important defence is, not just to those who work in this factory but also to industry right across the country,” Mr Williamson added.

“When you’re spending money on defence, whether it’s the RAF, the Royal Navy or the British army, you’re investing in jobs and technology and right across the country including here in Dorset.”

Cobham PLC is due to release its results for the year ending December 31 2018 next month.