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

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

Qatar Airways has lost a $6 billion order for 50 brand new Airbus A321neo aircraft after a British judge ruled that the European aircraft manufacturer was within its rights to break the deal because of an ongoing spat over a paint defect on Airbus’ larger A350 model.

During a hearing in London’s High Court on Tuesday, the judge told lawyers acting on behalf of Doha-based Qatar Airways that Airbus would be free to start selling the planes to rival airlines.  The decision could throw Qatar Airways’ growth and long-term fleet plans into disarray.

Airbus revoked the order in January after claiming Qatar Airways had broken a cross order clause by refusing to take delivery of an A350 aircraft that had been made for the airline.  Qatar Airways won a temporary restraining order against Airbus that prevented the aerospace giant from reselling the planes but the High Court has now ruled that Airbus was legally allowed to break the contract.

Qatar Airways was meant to receive the first A321neo next year with deliveries slated through to 2032 but these aircraft could now be destined for other carriers.  In anticipation of losing the case, Qatar Airways has already placed an order with rival aircraft manufacturer Boeing for equivalent 737MAX-10 jets but these won’t be ready for at least several more years.

The A321neo is in high demand and airlines are queuing up to get their hands of the highly sought after single-aisle aircraft.  Airlines normally have to wait for years to get hold of the plane because Airbus is struggling to meet demand so this judgement will give Airbus the ability to sell the jets to the highest bidder in a deal that could surpass what Qatar Airways was going to pay for them.

The original legal dispute centres on a paint defect with the Airbus A350 aircraft where paint cracks, bubbles and peels away from the composite structure fuselage.  In some cases, the paint damage is so bad that a special layer of mesh that covers the fuselage for lightning protection is exposed and could be damaged.

Qatar Airways claims the defect is an airworthiness issue and its regulator has grounded 21 A350’s over the issue.  Airbus insists the problem is purely cosmetic and that there is no reason for the aircraft to be grounded.  The European Air Safety Agency (EASA) which certifies the A350 agrees with Airbus’ assessment but requires airlines to monitor the issue.

Those assurances haven’t resolved the spat and instead, Qatar Airways has demanded Airbus get to the “root cause” of the problem.  Until that time, the airline says it will refuse to take delivery of any more A350s.

Qatar Airways sued Airbus late last year claiming at least $618 million in compensation, plus additional damages as the dispute dragged on.  The total compensation now demanded by the airline is well in excess of $1 billion.

Airbus says it hopes to resolve the spat amicably out of court but retaliated by cancelling the A321neo order.

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