AgustaWestland warns of job cuts as India scraps deal
MILAN (Reuters) - Italian defence group Finmeccanica(SIFI.MI) said on Thursday its AgustaWestland unit welcomed a decision by the Indian government to take part in an arbitration process over a $770 million helicopter deal, but warned of possible job cuts.
On Wednesday India cancelled a deal to buy 12 AW101 helicopters from AgustaWestland over what it termed a breach of integrity, but agreed to participate in an arbitration process. (Read details here)
"AgustaWestland ... confirms having received yesterday from India's Ministry of Defence notification concerning the appointment of an arbitrator from its side," Finmeccanica said in a statement.
The state-controlled defense group said it did not believe either the contract termination notice issued by the Indian Defence Ministry or the "show cause notice" provided an adequate basis for taking action against AgustaWestland.
It added however it remained committed to working with the Indian government to resolve the issues.
"AgustaWestland... is ready to perform the remaining obligations under the agreement for the supply of the 12 VVIP/VIP helicopters," it said.
India froze payments for the AW101 helicopters after Finmeccanica's then-chief executive was arrested in February for allegedly paying bribes to secure the deal.
Finmeccanica however said its AgustaWestland unit was ready to put into action a plan, already drawn up, to mitigate risks.
"This plan includes a cut in the work force to redefine the business model of the company and a reallocation of working capital with impacts on the company's supply chain," it said.
(Reporting by Stephen Jewkes; Editing by Eric Walsh)
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