Flight Lieutenant Sean Cunningham died in hospital after being ejected from his Hawk T1 aircraft while it was on the ground at RAF Scampton in Lincolnshire on 8 November 2011.
The ejector seat's parachute failed to deploy, sending South African-born Mr Cunningham falling 200ft.
In January, Martin-Baker Aircraft Company Ltd admitted failing to ensure the safety of non-employees in connection with the death of Mr Cunningham, 35.
On the first day of a two-day sentencing hearing, Lincoln Crown Court heard the company had agreed to pay £550,000 in prosecution costs.
However, despite their guilty plea, they dispute some of the prosecution's allegations.
Prosecutor Rex Tedd QC said the company had a duty to "ensure none of the pilots" were exposed to a health and safety risk.
"The defendant accepts that the risk persisted for a long period," he said.
"If the pilot was ejected from the Hawk aircraft, two shackles would not release from one another and would jam together and the main parachute would not deploy.
"The pilot would be several hundred feet in the air and there could only be one result of that - that is the pilot's death."
Middlesex-based Martin-Baker describes itself on its website as a family-run business and the "world leader in the design and manufacture of ejection and crash-worthy seats".
The court heard the company had "undoubtedly saved the lives of many pilots" since inventing the ejector seat.
After last month's guilty plea, Martin-Baker said that in the past 73 years, its ejection seats had been flown by 92 air forces, with more than 17,000 seats currently in use.
They also said that the malfunction in the Mark 10B seat was "an isolated failure relating to the tightening of a nut during maintenance procedures conducted by RAF aerobatic team mechanics".
But Mr Tedd claimed in court that there had instead been a "risk to many pilots over a lengthy period".
"The defendant's failure was anything but isolated," he said.
The sentencing continues.