Australian flag carrier Qantas said it had reached a $100 million settlement with engine maker Rolls-Royce over a mid-air blast that forced the grounding of its entire A380 fleet.
"Qantas has today reached an agreement with Rolls-Royce plc in relation to the QF32 incident," the carrier said in a statement to the Australian Stock Exchange.
"The full settlement of Aus$95 million will be recognised in the FY11 result."
It followed a Qantas A380 plane making an emergency landing in Singapore in November last year due to a mid-air engine explosion.
Qantas initially grounded all six of its Airbus superjumbos after the blast over Indonesia, which forced the plane to return to Singapore trailing smoke.
Subsequent investigations pinpointed a manufacturing defect which caused fatigue cracking in an oil pipe, resulting in a fire and potentially catastrophic engine failure.
Qantas, Singapore Airlines and Germany's Lufthansa all used the Trent 900 engine on A380 superjumbos and dozens of turbines had to be replaced.
Qantas did not resume full A380 services until January this year, and the plane involved in the blast will remain out of commission until next February as it undergoes extensive repairs.
The Australian carrier lodged a compensation case in the Federal Court of Australia following the incident, but said the settlement meant proceedings against Rolls-Royce would be discontinued.
"Qantas and Rolls-Royce have had a long and successful commercial partnership spanning several decades," the airline said.
"Qantas looks forward to a continued strong relationship with Rolls-Royce on the basis of the settlement announced today."
Battered by surging fuel prices and a string of natural disasters including an ash plume from Chile which forced widespread flight disruptions this week, Qantas has announced job cuts, cancelled plane orders and scaled back growth plans.
Qantas has never suffered a fatal crash in the jet age.
