Qatar Airways cancels more A320neos, warns of fiscal loss

Airline chief says Airbus issues having ‘huge financial impact’, and that relationship [with Airbus] ‘is very strained’

Image Credit: Qatar Airways
Akbar Al Baker, GCEO of Qatar Airways addressing the media during the press conference held in Doha today. In attendance, Lieutenant Colonel Muhammad Rashid Al Mazroui, Director of the Airport Passports Department; Mr. Hassan Al Ibrahim, Chief Tourism Development Officer at Qatar Tourism Authority; Mr. Zubin Karkaria, CEO of VFS Global.
Gulf News

DOHA: Qatar Airways is at risk of reporting a loss this fiscal due to ongoing issues with Airbus’ A320neo (new engine option) and A350 programmes, group chief executive Akbar Al Baker said on Wednesday.

The Doha-based airline has cancelled two more A320neo orders, Al Baker told reporters in Doha, bringing the total number of cancellations to three.

Qatar Airways has refused to take delivery of the latest version of Airbus’ best selling single-aisle jet since December over complaints the jet and its engine do not meet contractual obligations. Al Baker announced the first cancellation on June 3 and has threatened to walk away from the entire order of up to 80 jets valued at $6.4 billion (<-HYPERLINK http://gulfnews.com/business/aviation/qatar-airways-cancels-first-a320neo-1.1839796).

Three A320neos are valued at $321.9 million (Dh1.18 billion) at current list prices, according to the Airbus website. Al Baker said on Wednesday the airline would “keep on cancelling” orders as each jet passes its delivery date. He previously said the airline was willing to walk away from as many as five A320neos.

It would represent a significant blow for Airbus and the A320neo programme if Qatar Airways was to walk away from the deal.

Qatar Airways is also in dispute with Airbus over deliveries of its A350s. Al Baker said Airbus has failed to deliver five A350s, which he said combined with the A320neo issues have had a “huge financial impact” on the airline.

Qatar Airways now risks reporting a lost this fiscal that ends on March 31, 2017, he said. The airline made $445 million in its last financial year.

“Our relationship [with Airbus] is very strained,” Al Baker said, adding that the delivery issues are “seriously affecting our growth.”

Airbus told Gulf News in an email on Wednesday it is “working with our customers to deliver aircraft to full customer satisfaction.” It did not, however, respond to questions on when the A320neo problems will be resolved or if it was confident of delivery all A350s to Qatar Airways that was contractually obliged to this year.

Qatar Airways has said the delivery issues are the reason why the airline has pushed back the launch of several routes and reduced frequencies on existing routes. “We plan our routes, we plan our expansion, we plan our frequency increases and now we cannot deliver,” Al Baker said.

He added the he is still hopeful that Airbus will deliver all the A350s that it is contractually obliged to deliver this year. He previously said the airline was scheduled to receive “nearly ten” A350s in 2016.

A320neo engine maker Pratt & Whitney said on June 3 that Al Baker’s comments about the engines not meeting contractual obligations were “completely inaccurate.” Al Baker dismissed those remarks on Wednesday. “I am not the only one having this issue.”

Al Baker also said Qatar Airways would “soon” make a “large aircraft order” to meet fleet expansion and replacement plans, without divulging further details.

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