Airbus and Qatar Airways settle bitter A350 jet row

Surface damage seen on Qatar Airways' Airbus A350 on June 20, 2022. PHOTO: REUTERS

PARIS – Airbus and Qatar Airways have settled a dispute over grounded A350 jets, the companies said on Wednesday, averting a potentially damaging British court trial after a blistering 18-month feud that tore the lid off the global jet market.

The “amicable and mutually agreeable settlement” ends a US$2 billion (S$2.6 billion) row over surface damage on the long-haul jets. The spat led to the withdrawal of billions of dollars’ worth of jet deals by Airbus and prompted Qatar to increase purchases from Boeing.

The dispute has also focused attention on the design of modern carbon-fibre jets, which do not interact as smoothly with paint as traditional metal ones, and shed light on industrial methods.

The cancelled orders for 23 undelivered A350 aircraft and 50 smaller A321neos have been restored under the new deal, which is also expected to see Airbus pay several hundred million dollars to the Gulf carrier, while winning a reprieve from other claims.

Financial details were not publicly disclosed.

The companies said neither admitted liability. Both pledged to drop claims and “move forward and work together as partners”.

The deal heads off what amounted to an unprecedented public divorce trial between heavyweights in the normally tight-knit and secretive US$150 billion jet industry.

The two sides had piled up combined claims and counter-claims worth about US$2 billion ahead of the June trial.

French Finance Minister Bruno Le Maire welcomed the deal, which came in the wake of increasing political involvement amid close ties between France, where Airbus is based, and Qatar.

“It is the culmination of significant joint efforts. It is excellent news for the French aerospace industry,” he said.

Qatar Airways had taken the unusual step of publicly challenging the world’s largest planemaker over safety after paint cracks exposed gaps in a sub-layer of lightning protection on its new-generation A350 carbon-composite jets.

Airbus had acknowledged quality flaws but, backed by European regulators, had insisted that the jets were safe and accused the airline of exaggerating flaws to win compensation.

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Analysts said the deal would allow both sides to feel vindicated, with Qatar Airways winning damages and recognition that the problem lay outside the manual and therefore required a new repair, and Airbus standing its ground on safety and spared the difficult task of finding a home for cancelled A350s.

Qatar will get the in-demand A321neos needed to plan its growth, albeit three years later than expected, in 2026. Airbus’ decision to revoke that order, separate from the disputed A350 contract, had been criticised by the International Air Transport Association.

The settlement is also expected to stop the clock ticking on a claim for grounding compensation that had been growing by US$6 million a day, triggered by a clause agreed upon after the repainting of a jet for the World Cup revealed significant surface damage.

Originally valued at US$200,000 a day per plane, Airbus’ theoretical liability ratcheted upwards by a total of US$250,000 an hour for 30 jets – or US$2 billion a year – by the time the deal was struck, based on court filings.

Airbus said it would now work with the airline and regulators to provide the necessary “repair solution” and return Qatar’s 30 grounded planes to the air. REUTERS

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