In an unexpected twist of the story, Airbus and Qatar Airways agreed to terminate their legal dispute over the A350. The two companies announced an “amicable and mutually agreeable settlement” early evening Central European Time. Interestingly, the agreement includes the reinstatement of the orders for 50 A320neos and 23 A350-1000s that Airbus unilaterally terminated last year. Airbus and Qatar Airways settle their legal disputes.
Rumors of an out-of-court settlement surfaced last Monday and were reported by Reuters on Tuesday. AirInsight learned this afternoon that an announcement was due after the closing of the markets in Europe.
Airbus and Qatar have agreed to discontinue the claims and counterclaims they presented earlier during various London High Court case management conferences. Qatar Airways was claiming some $2.0 billion for the damages it suffered after it had to ground up to 29 A350s from August 2021 and a refund for pre-delivery payments, with the claim growing daily. Airbus claimed damages for costs related to undelivered aircraft to Qatar.
The two parties agreed that the root cause of their dispute – the paint quality issue on the A350 fuselage and wings – would be dealt with through a special repair program. In their press statements, Airbus and Qatar say this program is already underway but don’t provide details about the repair timeline, let alone who will pay for it.
The reinstatement of the new aircraft orders by Airbus is also significant. The airframer unilaterally terminated the contract for fifty A321neo’s January 2022, claiming Qatar cross-default on payments and contractual obligations for A350-1000s that had been assembled or were in advanced stages in Toulouse. In September, it confirmed that it had also deleted the remaining nineteen unbuilt A350-1000s and four built aircraft from the backlog. When AirInsight asked CEO Guillaume Faury earlier in January about the status of these aircraft and production slots, he was unwilling to answer the question.
Highest level discussions
So far, this are the known details of the amicable agreement, which is not an admission of liability by either party, both wish to stress. What contributed to it has not been disclosed, but the final agreement was reached just before the press releases were sent. Negotiations have been going at the highest levels, with French President Emmanuel Macron raising the topic during a recent visit to Doha and a meeting with Qatar’s Emir, Sheikh Tamim bin Hamad al-Thani, Reuters reported. Last Sunday, French Minister of Finance, Bruno Le Marie, was in Doha and reportedly discussed it again.
AirInsight learned that a meeting in Doha on January 25 between Airbus, the Qatar Civil Aviation Administration (QCAA), EASA, and Qatar Airways, which was canceled last minute on January 11, broke the ice between the parties involved. Airbus was keen to learn the basis of the QCAA for its decision to ground the A350s in August 2021. During the latest case management conference in London, Justice Waksman pushed Qatar Airways to produce correspondence between the agency and Al Baker about this before April 21, in line with the demands from Airbus.
Akbar Al Baker once said that he would avoid discussing matters with the media, but not so last June during the IATA AGM in Doha. (Richard Schuurman)
Settlement is overdue
The fact is that the settlement is overdue, as the case was not moving forward in a way that worked for either side. When even the judge gets irritated, things are not going well. Neither side was going to secure a “win.” While the language speaks of “work together as partners,” it will take some time to get over the damage of the disagreements to date.
Airbus will reinstate the Qatar orders it canceled. What this means monetarily is not going to be disclosed. Airbus will likely help or even cover the cost of the paint issues on the parked Qatar A350s. Qatar needs the capacity as traffic booms and needs these aircraft to fly. Airbus gets to add back 75 orders to its backlog. Both sides quietly get to save the lawyer fees.
How amicable is the settlement? Akbar Al Baker has a well-deserved prickly reputation dating back years – remember when Boeing’s 777-300ER was shown off at Farnborough with the Qatar Airways logo among other customers? H.E. Mr. Al-Baker was a no-show for this and denied the aircraft were ordered when, of course, they were. He has hammered Boeing about the 747-8 and the 787, so it’s not only Airbus that has had to face his wrath. He’s a hard man to please; note his demeanor at the MAX10 order in 2022 at Farnborough. He also had a run-in with Pratt & Whitney over the GTF for the A320neo order and canceled it altogether.
Sooner or later, an OEM was going to push back. Pratt & Whitney was the first. Then Airbus did not respond well to Qatar Airways when the A350 saga started. At the first A350 delivery in 2014, Al-Baker famously said he’d avoid discussing matters with the media, to which Airbus’ Chief Commercial Officer John Leahy immediately quipped his approval. That was a laugh.
The A350 saga between Airbus and Qatar Airways turned out well for the lawyers and nobody else. (The same for the Embraer vs. Air Astana saga) This is certainly not the end of Qatar Airways’ complaints about an OEM. It’s just the end of another chapter.