In late December we discussed the ongoing dispute between Airbus and Qatar Airways.
Stemming from paint cracking and surface degradation on the airline’s A350s,
much has happened in the last two months.
In this video, we’ll cover these new developments and discuss where this dispute is headed. So,
if you’re not up to date on this entire saga, we’d encourage you to hit pause on
this video and check out our December 20th explainer on this ongoing ordeal.
For everyone else, let’s see what’s happened over the last two months!
When we ended our first long-haul video on this topic in late December,
we had noted that Airbus was seeking a legal assessment against Qatar Airways in an
attempt to resolve the dispute. The planemaker called the airline’s public statements quote
“ongoing mischaracterisation of non-structural surface degradation.”
On December 21st, the day after our previous video was released, Qatar Airways issued legal
proceedings against Airbus in the Technology and Construction division of the High Court in London
regarding the accelerated surface degradation condition impacting its A350s.
Since then, with the release of more information,
the situation and tension between the two firms has only escalated…
According to court documents seen by Reuters in early January,
Qatar Airways was revealed to be seeking damages worth $618 million in its dispute with Airbus.
The publication adds that Qatar Airways is seeking an extra $4 million for
each day that one of its A350s remains grounded.
Just two weeks later, around January 21st, Airbus announced that was canceling Qatar Airways' order
for 50 A321neos. A spokesperson for the planemaker confirmed the news to Simple Flying, stating:
"We confirm we did terminate the contract for 50
A321s with Qatar Airways in accordance with our rights."
The shocking move by the European planemaker surprised many in the industry. While airlines
cancel orders for aircraft from time to time, usually due to financial issues or changing market
conditions, it's incredibly rare for a planemaker to be the party terminating the contract.
Aside from issues relating to government sanctions,
January’s move by Airbus may indeed have been the first case of an aircraft manufacturer
canceling an order placed by a customer.
In a seemingly retaliatory move, Qatar Airways on the same day released video footage of the
surface degradation it has witnessed on its aircraft. The footage, as you can see here,
shows substantial degradation to the surface of some of the airline’s A350s.
Commenting on the release, the airline said,
"We confirm that we are adhering to all of our obligations under all applicable contracts.
It is therefore a matter of considerable regret and frustration that Airbus has
taken the apparent decision to expand and escalate this dispute."
While the footage didn’t change everyone’s opinion, some watching on the sidelines
admitted that the damage shown was far greater than what was described or imagined.
The very next day Simple Flying published an article and subsequent video analyzing what
options might be available to Qatar Airways in light of its canceled A321neo order.
Considering the airline’s ongoing feud with Airbus,
we concluded that the Boeing 737 MAX 10 would be the closest suitable option outside of Airbus.
Although the stretched variant has a shorter range and slightly lower capacity, it seemed to be the
best fit, considering the fact that the next aircraft up would be Boeing’s 787-8 Dreamliner.
About 10 days later, it was announced that Qatar Airways would be the launch customer for Boeing’s
upcoming 777X freighter, with a commitment for up to 50 airplanes. On top of this deal
for freighters, the airline also signed with Boeing for as many as 50 737 MAX 10 aircraft.
The total value of this 737 MAX 10 commitment, Qatar Airways noted, is nearly $7 billion at
current list prices. In a public statement, the airline’s CEO Akbar al Baker added:
“Qatar Airways very much looks forward to adding the 737-10 to its fleet, with this new variant
of the 737 being ideally suited to our short haul network, allowing us an opportunity to
further enhance our product offering for our customers, modernize our fleet and operate the
most efficient aircraft in its category,” Boeing Commercial Airplanes President and
CEO Stan Deal went on to say that Boeing was proud of its partnership with Qatar Airways
and quote “honored that this world class airline continues to put its trust in our Boeing team.”
The intense conflict between Airbus and Qatar Airways was further demonstrated
when it was revealed that Airbus had also canceled two Airbus A350s on order by the airline.
This was discovered by examining Airbus’ January orders and deliveries report
released in early February. In the reporting, it was stated that Qatar Airways had just 40
A350-1000s ordered. However, this is down from the original 42 the airline had agreed on.
This slight change in numbers revealed that Airbus had canceled its commitment
with the airline for two airframes. To date,
19 have already been delivered to Qatar, leaving a current backlog of 21.
Of course, with the conflict intensifying by the week, it’s difficult to say whether
or not the carrier will want to take delivery of its undelivered widebodies!
Despite the official court hearing on the A350 surface degradation issue being in late April,
more legal action ensued. On Friday, February 18th,
it was reported that Qatar Airways had asked a London court for an injunction
to prevent Airbus from canceling the A321neo order placed by the airline.
From its large order, Qatar Airways was expecting its first six A321neos in early 2023.
Qatar's lawyer, Philip Shepherd, told the court that the cancellation was a quote "hand grenade
thrown in our bunker," and said the decision to do so was misguided and illegal. The airline’s
lawyer went on to say that Airbus quote “took the risk and knew it would be absolutely incendiary.”
It was also noted that the airline has already paid $330 million for its A321neo contract so far,
adding that canceling the A321neos was a tactical
move designed to put pressure on Qatar over the A350 dispute.
The next day it was reported that the judge had ordered Airbus to delay "any practical impact"
of a decision to cancel Qatar Airways' major A321neo order for several weeks.
This means that the European planemaker is restricted from
taking subsequent action to allocate those order slots to other airlines.
During the week of April 4th, a hearing on the A321neo order cancelation is scheduled
as Qatar Airways hopes to get an injunction to reinstate the contract.
Reuters notes that the judge has ordered Airbus not to do anything until this
hearing in April that may affect its ability to fulfill the Qatar Airways' A321neo order.
This court order has been put in place should the
airline win its case to prevent the aircraft order from being canceled.
The news was unwelcome for Airbus, which has a massive backlog for its A320neo family.
Indeed, its backlog sits in the thousands of aircraft,
as carriers from all over the world eagerly await the new and efficient narrowbodies.
Rosalind Phelps, a lawyer for Airbus,
said the canceled planes had been removed from the planemaker's industrial plans,
warning that there could be damage to the supply chain if it was too restricted in its abilities.
Of course, Airbus is likely quite eager to reassign the slots to a willing carrier.
The injunction sought by Qatar Airways is an incredibly interesting move considering that
it has already sought a (partial) alternative in the form of its 737 MAX 10 order. While it’s
not a perfect substitute for the A321neo, the order placed with Boeing is quite obviously a
replacement for the Airbus narrowbodies. The order has been placed with Boeing,
and the press releases have been issued for the deal. So what’s going on?
Well, unless Qatar Airways is hoping for a grand fleet expansion with both A321neos
and 737 MAX 10s, the airline seems to be playing one of two scenarios:
One, the move to stop Airbus from canceling the order could be considered a move to
spite the European planemaker and make its production situation difficult…
Or two, Qatar Airways does indeed want the A321neos and will either cancel or convert its
737 MAX order once the court rules in its favor. With the court date for the main A350 dispute
set for late April, and the A321 injunction hearing set roughly three weeks before it,
tensions between the two parties are likely to intensify further throughout the month of March.
What else could we possibly expect from the two sides between now and April? And what do you think
Qatar Airways will do if it wins its injunction against Airbus for the A321neo order cancelation?
Let us know what you think by leaving a comment!