Rockwell Sues Hughes Over In-Flight Deal

Rockwell International Corp.’s avionics division sued Hughes Electronics Corp., claiming Hughes failed to disclose vital information about an in-flight systems subsidiary sold to Rockwell in 1997.

Hughes allegedly failed to disclose that its former subsidiary, Hughes-Avicom International Inc., wasn’t complying with the terms of a contract to design and build a new communications interface for Boeing Co.’s 747 and 767 planes. As a result, the Rockwell Collins division was forced to expend significant staff and resources to meet an April 1998 delivery deadline, the suit claims.

Rockwell had acquired the Hughes unit to add in-flight entertainment systems to its aircraft-electronics line. Hughes-Avicom had 1,200 employees and estimated 1997 sales of $120 million when the sale was announced.

“Rockwell’s damages include the expenses it incurred in order to save the standard interface program from default,” Rockwell’s attorneys claimed in the suit, which was filed today in Los Angeles County Superior Court.

The suit seeks at least $28 million in compensatory damages from El Segundo, California-based Hughes, a unit of General Motors Corp. Hughes, the largest U.S. satellite maker, couldn’t immediately be reached to comment.

Shares of Rockwell International, based in Milwaukee, rose 9/16 to 54 9/16. General Motors’ Class H stock, which represents Hughes Electronics, rose 1 5/8 to 56 1/2.