European plane maker’s contract dealings have been under investigation by the U.S., U.K. and France
LONDON— Airbus SE EADSY +0.84% has agreed to pay penalties of €3.6 billion ($3.96 billion) to settle corruption probes by U.S., U.K. and French authorities into contract dealings, lifting a reputational and legal cloud that has hung over the company for years.
The European plane maker said it had come to terms in principle with prosecutors at a preliminary court ruling in the U.K. on Tuesday, paving the way for a so-called deferred prosecution agreement, which allows the company to avoid formal charges.
The settlement remains subject to review by courts in each jurisdiction, Airbus said, with hearings expected on Jan. 31. With approval, the penalties would be booked as a provision in the company’s 2019 financial accounts.
Resolution of the issue comes about four years after Airbus first announced it was under investigation for using third-party consultants suspected of paying bribes on behalf of the company to secure lucrative orders for its aircraft.
Airbus said at the time that it took the matter to investigators after discovering irregularities in its submissions for state-backed funding guarantees. The matter later came under the purview of the U.S. Department of Justice for inaccuracies in disclosures relating to sales of military equipment that included U.S.-made components.
The resulting investigations grew into a slow-boiling crisis for Airbus, leading to an overhaul of its top management and sales teams. The company has handed over millions of documents to investigators, and created a new ethics and compliance system designed to prevent future contraventions. It also banned the use of third-party agents and halted ongoing contracts, a move which has led to a series of legal disputes.
In 2017, Rolls-Royce Holding PLC reached a similar settlement that required the jet-engine maker to pay £671 million ($874 million) in penalties to U.K., U.S. and Brazilian investigators. Based on the scope of the Airbus probe, the plane maker’s fine could be several times bigger.
Airbus shares closed the day up 1% after rising sharply earlier on the news of the deal.
The deal allows Airbus Chief Executive Guillaume Faury, who took over the top job in April, to move beyond an issue that occupied his predecessor, Tom Enders. The new management team can now focus more fully on running the company at a time when arch rival Boeing Co. is mired in the crisis over its 737 MAX airliner.
The grounding the 737 MAX has allowed Airbus to overtake Boeing as the world’s largest jet maker by deliveries, a crown it has chased for years. Despite that victory, Airbus has been battling its own production issues at its factories and among its suppliers. That has prevented it from increasing production rates for the A320neo—the MAX’s main competitor—and winning over Boeing customers thinking of dropping orders for the grounded jet.
The corruption probe consumed much of Mr. Enders’s time at the end of his tenure as Airbus CEO. He helped oversee an internal investigation into the use of middlemen and changed out management layers in an effort to secure a deal with international prosecutors.