*

Norway dropped NH90 contract in 2022 over delays and

reliability

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Oslo had claimed over $3 billion from Airbus-led

consortium

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Settlement avoids rare public court trial in defence

industry

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NH90 has been plagued by criticism over delays and

maintenance

(Recasts with extra context and background throughout)

By Terje Solsvik, Gwladys Fouche and Tim Hepher

OSLO/PARIS, Nov 3 (Reuters) - Norway and a trio of

European aerospace manufacturers agreed on Monday to settle

mutual claims for damages after the NATO nation axed an order

for delayed NH90 submarine-hunting helicopters, heading off a

potentially awkward defence industry trial.

NHIndustries and owners Airbus, Leonardo

and GKN Fokker agreed to pay 305 million euros ($355.7 million)

on top of 70 million already paid and take back the mothballed

helicopters and parts, the two sides said in a joint statement.

That is a fraction of the 2.86 billion euros Norway had

claimed, part of which was meant to cover the cost of buying

U.S.-made replacements, but the companies agreed as part of the

deal to drop their own damages claim for 730 million euros.

SETTLEMENT AVOIDS TRIAL OVER NH90 SUB-HUNTING HELICOPTERS

The settlement, confirming a deal reported earlier by

Reuters, came one week before the scheduled start of five months

of Oslo hearings in what was seen as an unusually sensitive case

as NATO rearms to counter submarine threats in Europe's north.

Norway is NATO's monitor for a 2 million square kilometre

(772,000 square miles) area of the North Atlantic. Russia's

Northern Fleet has its base on the Kola Peninsula, an area in

the Arctic bordering Norway.

The NH90 army and navy helicopter first flew almost 30 years

ago and is one of Europe's flagship arms projects. It boasts the

first fully computerised controls for a military helicopter but

has been plagued by criticism over delays and maintenance.

The settlement ends a procurement saga which has dragged on

for almost a quarter of a century since Norway ordered 14 NH90s

in 2001 to provide a unified coastguard and naval frigate fleet.

In 2022, Norway said it would cancel the NH90 over delays

and maintenance problems and seek a refund from the consortium,

which called the move "legally groundless". In 2023, Sweden

threatened to follow suit and Australia sped up the retirement

of its own fleet.

The Norwegian defence ministry has said deliveries should

have been completed by the end of 2008 but that it faced more

than a decade of delays and missing parts, hampering operations.

NORWAY CLAIMS NH90 PROBLEMS WERE "ALMOST UNPARALLELED"

Preparations for a much-anticipated public trial starting on

November 10, including arrangements for handling classified

material, had pushed ahead after attempts at mediation failed.

Although some hearings were expected to be held behind

closed doors, the case was set to expose significant shortfalls

after a state filing called NH90 problems "almost unparalleled

in any other contract for the manufacturing of military

equipment".

The first partially completed helicopter was delivered six

years late and it was not until 16 years after the contract was

signed that the first fully operational aircraft was deployed -

12 years behind schedule, the government said in its complaint.

By the time the contract was cancelled in 2022, Norway was

on average getting 100 flight hours per year out of its NH90

helicopters, compared with a target of 400 per year, it added.

Norway's claim had included 2.1 billion euros to cover the

purchase of replacement Seahawks from Lockheed Martin's ( LMT )

Sikorsky, according to the filings reviewed by Reuters.

In its counterclaim, NHIndustries acknowledged that the

project had faced difficulties and partially blamed delays in

agreeing specifications. Norway's requirements include operating

reliably in harsh weather along Europe's longest coastline.

But it called the size of the claim "shockingly inflated"

and noted that some of the helicopters had been used for years.

NHIndustries has said it has turned the corner on the

availability of NH90 support and is preparing upgraded versions.

($1 = 0.8575 euros)