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Friday, September 22, 2023

Qatar Airways Loses $6 Billion Order For Airbus A321neo Jets After London Court Ruling

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Qatar Airways has lost a $6 billion order for 50 brand new Airbus A321neo planes after a British judge found that Airbus was within its rights to cancel the contract due to a dispute over a paint flaw on Airbus’s larger A350 model.

During a hearing in London’s High Court on Tuesday, the judge informed lawyers representing Doha-based Qatar Airways that Airbus could begin selling jets to competitors. Qatar Airways’ development and long-term fleet plans could be thrown into chaos as a result of the decision.

In January, Airbus canceled the deal, alleging Qatar Airways had violated a cross-order agreement by refusing to accept delivery of an A350 aircraft built specifically for the airline. Qatar Airways was granted a temporary restraining order against Airbus, preventing the aerospace giant from reselling the planes, but the High Court has now concluded that Airbus was legally permitted to breach the contract.

The first A321neo was supposed to be delivered to Qatar Airways next year, with deliveries continuing until 2032, but the planes could now be sold to other airlines. Qatar Airways has already made an order with rival aircraft maker Boeing for similar 737MAX-10 jets in case the case is lost, although these won’t be ready for at least another few years.

Airlines are lining up to get their hands on the A321neo, which is a highly sought-after single-aisle airplane. Because Airbus is having trouble keeping up with demand, airlines will have to wait years to get their hands on the planes. As a result of this ruling, Airbus will be able to sell the planes to the highest bidder in a deal that could be worth more than Qatar Airways was willing to spend.

The original legal case revolved around a paint problem on the Airbus A350 aircraft, in which paint cracks, bubbles, and peels away from the composite fuselage. In certain situations, the paint damage is severe enough that a specific layer of mesh that protects the fuselage from lightning is exposed and may be damaged.

Qatar Airways believes the flaw is an airworthiness concern, and the airline’s regulator has grounded 21 A350s as a result of the problem. The damage, according to Airbus, is entirely cosmetic, and there is no need for the plane to be grounded. The European Aviation Safety Agency (EASA), which certifies the A350, concurs with Airbus’ assessment but advises airlines to keep an eye on the situation.

Those guarantees haven’t put an end to the dispute, and Qatar Airways has demanded that Airbus investigate the “root cause” of the issue. Until then, the airline has stated that it will not accept any additional A350s.

Late last year, Qatar Airways filed a lawsuit against Airbus, claiming at least $618 million in damages, plus extra damages as the case progressed. The airline is now seeking total compensation of more than $1 billion.

Airbus says it expects to settle the dispute peacefully outside of court, but it has canceled the A321neo purchase in retaliation.

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