There must have been a few raised eyebrows at Boeing HQ in Chicago when they heard that Qatar Airways is seeking to reinstate the order for fifty Airbus A321neo’s that Airbus has terminated in January. After which Qatar quickly signed a Memorandum of Understanding for fifty Boeing MAX 10s on the same day it launched the 777-8 Freighter. Is Qatar Airways betting on two horses?
The news reports from Reuters on February 17 and 18 seem at least to confirm this. With a request for an injunction at a London court on Friday, the five-star airline has been seeking to reinstate the order, which Airbus had unilaterally terminated on January 20 as part of the separate conflict over the A350 paint quality issue. Airbus repeated in court yesterday what it has said before: that it was entitled to terminate the order as Qatar Airways defaulted on payments for two A350s since last year. The A321neo/XLR order has been deleted from the Airbus order book, as have two A350-1000s, one more than the airframer said in a January 17 document.
In the court hearing on February 18, Qatar Airways admitted it had been completely taken by surprise when Airbus canceled the A321neo’s. “It was a hand grenade being thrown in our bunker”, Reuters quotes the airline’s lawyer. He said that Qatar so far has paid $330 million in pre-delivery payments on the aircraft, of which the first was scheduled to arrive in February 2023. This indicates that the airline was fully respecting the contract, despite the ongoing legal case over the A350 for which Qatar is preparing its defense until February 28, and that will continue on April 26.
The A321neo case will be continued on April 4. Airbus has been summoned by the judge not to undertake any action until then that could put Qatar’s order position at risk, but the airframer stated that the order positions have already been removed from the production schedule.
If Qatar wins the court case and Airbus needs to reinstate the A321neo order, Qatar has to choose what to do with the MoU for the Boeing MAX. (Airbus)
Airbus will have no difficulties in filling these slots, as it has a large backlog for the A321neo. CEO Guillaume Faury denied during Thursday’s 2021 results press conference that Airbus is exploiting its position, something that IATA Director General Willie Walsh hinted at during an earlier media conference. “No, it is not self-serving”, said Faury, “it comes from the contractual situation with Qatar Airways. We are now in a legal dispute and we have to take steps that are linked to that very specific situation.”
Airbus open to finding an amicable solution
During the investor’s call earlier that morning, Faury said: “We had to exercise our rights and terminate two A350-1000 delivery slots and the A321neo contract. This followed after many attempts to find mutually beneficial solutions and we hope for an amicable solution.” He repeated this a day later on French TV. Airbus has been in discussions with other A350 operators and been “super transparent” about the paint issues “but no other airline than Qatar Airways sees it as an airworthiness issue. We consider it is not and this is also the assessment of EASA.”
So what will happen next until April? Will Faury’s offer to find an amicable solution be accepted by Qatar Airways, or have both parties dug themselves already too deep into the trenches, and is it up to the court to decide the outcome? If the London court rules in favor of Qatar Airways and forces Airbus to reinstate the A321neo order, the airline run by Akbar Al Baker finds itself in a new position of having potentially two contracts: the reinstated one with Airbus plus the MoU with Boeing for 25 MAX 10s plus 25 options.
Returning to plan A and taking the A321s would mean getting an aircraft that was Qatar’s first choice after all when it signed a revised 2011-order in 2017. It would also mean that both Qatar and Airbus would have found the amicable solution that Faury is offering.
But Qatar could also stick to plan B and confirm the MoU with Boeing on technical and commercial terms, even if the A321neo order would be on the table again. If it doesn’t, there is every reason with Boeing of feeling exploited by Qatar to get a better deal on the back of the US airframer. This would harm the “ever-building and strong relationship between Qatar Airways and Boeing” that Al Baker referred to on January 31 when he announced the MAX MoU and 777-8F order.
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
In 2022, he has gone full-time freelance. Richard has been contributing to AirInsight since December 2018. He is also writing for Airliner World and Aviation News. From January 2023, he will add a part-time role with Dutch website and magazine Luchtvaartnieuws. Twitter: @rschuur_aero.
An MOU is not an order, it is tentative, and is not infrequently reversed based on other developments. Airlines often play the manufacturers against each other before final orders are announced, so Boeing would not be surprised if Qatar shifts back to the Airbus order prior to its MOU being converted into an order.
That’s exactely what we mean: because the MoU is not a confirmed order, Qatar is not contractually bound to take the 50 MAX until a definitive order is signed. But expect Boeing to be pissed off if Qatar Airways would ditch a $7bln order.