Qatar Airways Denied Motion to Reinstate Airbus Contract

[In The News]

DALLAS – Today was an important day in the ongoing dispute between Qatar Airways (QR) and plane maker Airbus. A British judge denied a motion by QR to reinstate a jet contract that Airbus had canceled.

To recap, the two companies have been locked in a dispute over the safety of Airbus A350 aircraft delivered to the airline. Deterioration of the surface under the paint on several of the delivered crafts, which exposed the copper lightning protection mesh, led local authorities in Doha to ground around 20 of the planes.

Although Airbus says that the damage is merely cosmetic and that the planes are safe to fly, QR has claimed otherwise and has refused to take delivery of additional A350s until Airbus remedies the problem.

Qatar is not convinced by the manufacturer’s explanation that this deterioration is the result of an early production problem that has since been fixed.

Qatar Airways A7-ANB Airbus A350-1000. Photo: Ryan Scottini/Airways

Pull the Plug

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In light of this dispute, Airbus pulled the plug on a second contract with QR, namely to deliver 50 A321neo aircraft to the airline. Airbus said it was justified in canceling the contract due to a “cross-default clause” that allows it to cancel one contract if a customer refuses to honor another deal.

Qatar, wanting the A321s to open new routes, filed suit in a British court asking a judge to rule that the manufacturer fulfill its obligations and deliver the jets. Today’s decision says that Airbus does not need to do so.

Reuters reports that the judge rejected Qatar’s claim that it could not find alternatives. It could, for example, lease jets or deploy 737 MAX planes it has provisionally ordered from Boeing.

Now, Airbus is free to market the A321neo to other customers or to clear them from its production schedule to ease factory congestion.

QR has sued Airbus over the loss of revenue it is suffering due to the A350 problems. That amount has grown to over US$1bn.

Qatar Airways A7-ANE Airbus A350-1000 (OneWorld Livery). Photo: Nate Foy/Airways

Invalid Claims

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Airbus has accused QR of publicizing safety claims that are not valid. The company says that QR may be doing so in order to avoid taking delivery of unneeded jets at a time of weak customer demand.

“Airbus is pleased that this issue is now behind us and that we can now focus on the main topic of misrepresentation by Qatar Airways of the safety and airworthiness of the A350,” the manufacturer said.

Qatar had no immediate comment, but Reuters reports that the A321 issues were always secondary to the primary issue with the A350s.

QATAR AIRWAYS A7-ALC AIRBUS A350-900. Photo: Iain Marshall/Airways

Precedent-Setting?

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It is possible that this judgment will set a precedent that could affect the relationships between other airlines and major aircraft manufacturers. 

“People will look at this and take extra care to resist such cross-default clauses,” the head of a large airline fleet said in a Reuters report.

Industry insiders say that a full-scale trial on the A350 problem would benefit neither side. But Reuters reports that the two sides spent part of Today’s hearing discussing the logistics of a trial to be held as soon as early 2023, accompanied by searching demands for internal documents.

Typically, problems like this are solved through closed arbitration.

As part of today’s ruling, the airline was ordered to pay most of Airbus’ costs on the A321neo part of the case.

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Featured image: Qatar Airways A321neo. Render: Airbus

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