Qatar Airways loses UK court bid to force Airbus to supply A321neo
The UK’s high court has denied a request by Qatar Airways to force Airbus to keep building A321neo jetliners for the airline as part of a wider public $1bn (£786m) bust-up that has implications for other future multibillion-dollar jet deals.
The preliminary ruling by a UK judge means the European plane manufacturer is free to market the popular smaller jets to other carriers, while the two sides remain locked in a separate disagreement over the safety of larger A350 jets.
The 16-month dispute stems from claims made by Qatar Airways that peeling and cracking paint on the A350 aircraft made by Airbus poses safety issues in the event of a lightning strike. Airbus argues it is a maintenance rather than a safety issue.
In January, the Toulouse-based aircraft manufacturer revoked a $6bn deal for 50 single-aisle, short-haul A321neo jets in retaliation for Qatar’s refusal to take A350s. This prompted the airline to take the case to the high court, arguing that the cancellation of the A321neo jet order was a breach of contract.
The planemaker said it was pleased with the “court’s decision in recognising Airbus’s position that a transparent and trustful cooperation is essential in our industry”.
It added: “The litigation is about the misrepresentation on the safety and airworthiness of the A350, which we will continue to defend, as well as the reputation of its operators and the rules governing aviation safety in the face of unjustified claims.”
It said it would monitor the court’s decisions for the timetable on Tuesday. The court will set out a schedule that could lead to the case coming to trial, possibly during the football World Cup in Doha in November.
Qatar Airways declined to comment.
Airbus’s decision to cancel the A321neo deal has alarmed some airlines, with the head of the industry body the International Air Transport Association, Willie Walsh, describing it as a “worrying” development.
Walsh, the former chief executive of the British Airways owner IAG, said in January: “I would hate to think that one of the suppliers is taking advantage of their current market strength to exploit their position, and that is something we are watching very closely.”
The chairman of Dubai’s Emirates, Tim Clark, has said he is “not unsympathetic” to its main Gulf rival, Qatar Airways, over the A321neo fallout.
Airbus argues that the two contracts are connected by a “cross-default” clause that allows it to pull the plug on one deal when an airline refuses to honour the other.
It has accused Qatar Airways, the A350’s biggest customer, of airing invalid safety concerns over damage to the surface of the larger jets to avoid taking them at a time of weak demand, and to file a $1bn compensation claim.
Qatar, for its part, says it was right to stop taking A350 deliveries over what it describes as genuine safety concerns. The concerns were raised by Doha’s regulator over gaps or corrosion in a sub-layer of lightning protection exposed by cratered paint, which led the airline to ground 23 of its A350 fleet. It argues that the cross-default clause does not apply.
Officials worry the A321neo case may set a worrying precedent, allowing disputes to ricochet from one contract to another, tightening the grip of aircraft makers Airbus and its US rival Boeing.
“People will look at this and take extra care to resist such cross-default clauses,” the head of a large airline fleet told Reuters.
Backed by European regulators, Airbus denies any A350 safety flaws, though it has acknowledged that paint peeling is a feature of modern carbon jets, which require repainting more often.
The problem has also affected other carriers, but Qatar is the only airline to have grounded the planes.
Airbus says the planes have backup protections and the affected areas would have to be much larger to pose a hazard. Qatar Airways has said it cannot rule out such risks without deeper analysis from Airbus, and is unwilling to take any more A350s until the issue is resolved.
Several industry sources say it is not in either side’s interest to spark a fullscale public trial, which could produce a flood of further disclosures and test relations between France and Qatar at a time when Europe urgently seeks new gas supplies.