reached an agreement to pay the Defense Department $283 million to settle a lawsuit over how the company's Pratt & Whitney unit used to account for costs.
The Hartford, Conn., company said Tuesday that the deal will end the litigation, which dealt with Pratt & Whitney's accounting for engine parts on commercial-engine collaboration programs from 1984 through 2004. The disagreement had centered on the allocation of overhead costs between commercial and government programs.
Since Jan. 1, 2005, Pratt & Whitney has used an alternative method for allocating overhead costs. That method is approved by the federal government and is based on the value Pratt & Whitney adds in the manufacturing process.
United had recorded reserves for the lawsuit, but they exceeded the actual settlement amount by around 5 cents a share. The company said restructuring charges over the course of this year will equal or surpass the difference. United also reaffirmed its earnings guidance of $3.50 to $3.60 a share for the year.
Shares of United were gaining 95 cents, or 1.6%, to $62.40 in premarket trading.