London: Qatar Airways said it was not obliged to accept deliveries of Airbus SE A350 jetliners until an issue with surface paint is fixed, accusing the European planemaker of lowering its standards to minimize the problem.
In a London court hearing on Thursday, Philip Shepherd, a lawyer representing Qatar Airways, said Airbus still has not provided a required root-cause analysis of the paint-surface issues “because we suspect they don’t like what it means for this aircraft.”
The hearing is looking at a separate issue tied to the dispute - Airbus’s decision to cancel an order for 50 smaller A321 narrowbodies as relations between the two sides soured. Qatar Airways, one of the planemaker’s biggest customers, is contesting the move, arguing there is no good substitute given the model’s superior range.
“I am asking them to perform the contract,” Shepherd said. “They are the monopoly supplier of A321, there is no other supplier and as such as a monopolist they owe a special duty not to abuse their monopolistic position.”
Industry shock
The court has told Airbus not to permanently hand over A321 production slots to other customers until the court determines whether to allow the cancellation. The planemaker’s decision to pull the contract shocked the industry, since it’s almost unheard of for a manufacturer to discard an order when a customer has the ability to pay.
The judge will consider the inconvenience to either side of canceling or reinstating the contract, as well as the uniqueness of the product on offer. Airbus has touted its A321 aircraft as a game-changer for airlines, allowing them to fly longer routes more economically.
At one point in the hearing, the judge asked Qatar Airways whether it had sought to lease A321s from aircraft lessors rather than purchase them directly. The airline’s lawyer said his clients had made inquiries but there was no availability, reiterating that the company would suffer extensive damage if the contract were canceled.
Threats
The judge questioned why the lack of availability was not included in evidence, calling it 'absolutely critical' to the hearing.
Airbus lawyers said the relationship had 'seriously broken down,' and it would be wrong to force the parties together. Sonia Tolaney, representing Airbus, said the airline has impugned the safety of the A350 as well as seeking to damage the reputation of the European Union Aviation Safety Agency by making comparisons to the Boeing Co 737 Max 'debacle'.
“It would be an extraordinary injunction that forced hostile parties to cooperate and Airbus to produce aircraft under the threat of contempt for almost a decade,” Tolaney said.
The cost of Qatar obtaining aircraft in the leasing market can be addressed through damages, Airbus said, and the aircraft cannot be considered as unique because similar aircraft can be obtained either in the leasing market or by turning to Boeing’s competing 737 models.
Airbus said Boeing’s competitor models have “comparable if not better range” than what Qatar has ordered with Airbus - a claim that raised eyebrows given Airbus’s touting of the A321’s capabilities.
Longer range
The planemaker’s lawyer said that just 20 per cent of the airline’s order are for the longer-range version of the A321, with a range of 6,500 kilometers, or 3,500 nautical miles, based on the configuration that the airline has chosen. Qatar said those models are the ones which are due to be delivered first, so are most relevant.
Another hearing on April 26 will set the timetable for the broader-case on the A350 contract. The judge said he could see a reason to accelerate the timetable given 'vested interests' in the outcome of the broader case, including other airlines who fly the A350.
He said he would give his ruling on the A321 cancellation on that date after giving the two sides more time to submit evidence on whether the contracts limit the number of damages that can be awarded. If this is the case it could make an injunction more likely, as Qatar may not be able to fully recover the amount lost through the order cancellation.
