Qatar Airways, Airbus Clash As Jetliner Dispute Reaches Court

Qatar Airways accused planemaker Airbus on Thursday of moving the goalposts in a bitter safety and contractual dispute by raising the allowable limit for flaws on its A350 jetliner. The two sides have been locked in a high-profile dispute over damage to anti-lightning mesh within the painted skin of the A350 that Qatar says has forced it to ground jets and stop taking deliveries.

"One would certainly not want to be sitting under a roof in that condition," Qatar Airways' lawyer Philip Shepherd told a London court hearing, referring to damage on the crown of the fuselage of jets that Qatar says it needs for the World Cup.

Airbus told the court that relations with the Gulf carrier had "seriously broken down" as their $18 billion, 25-year relationship unravels in the makings of a corporate divorce trial in the global jet market.

Qatar has grounded 23 of the A350 jets, voicing concerns over the safety impact of gaps in a layer of lightning protection left exposed by cracked and bubbling paint.

It says it will not take further deliveries until the cause is formally explained and is suing Airbus for steadily rising compensation that now exceeds $1 billion.

The world's largest planemaker has acknowledged quality problems with the jets but insists the damage is well within safety tolerances, noting that European regulators consider them airworthy and other airlines continue to fly them.

Lightning strikes jets about once a year and the A350 includes a layer of copper foil to protect its lightweight carbon fuselage, which is less conductive than traditional aluminium.

Airbus acknowledged in a witness statement that it had increased the maximum area of missing mesh allowed on the A350 to 1,000 mm2 from 200 mm2 following recent analysis.

"That is simply making the goal smaller at their end, half way through the game," Shepherd told the hearing, referring to a move by Airbus to increase a limit on how much damage is allowed.

An Airbus spokesman said Qatar's comment was a "misrepresentation of the facts". It has said the damage found by Qatar Airways and other carriers is far below the 40% of missing mesh that would be needed to cause a safety problem.

WIDENING DISPUTE

In January, the dispute widened to the industry's best-selling model when Airbus revoked an order from Qatar for the smaller A321neo in retaliation for Qatar's refusal to accept delivery of more A350s.

Qatar asked a UK judge on Thursday to extend an injunction that would freeze the cancellation pending a full trial expected to be months away. The first A321neo is due to be delivered 2023.

It accused Airbus of cancelling the order as a tactic to put pressure on Qatar over the core A350 case, while Airbus accused its biggest A350 customer of whipping up the row to secure compensation and paper over a slump in demand.

In order to decide on Qatar's request for an injunction, the judge will weigh which side has most to lose and to what extent the plane is unique in its category.

That issue goes to the heart of Airbus's battle for sales with rival Boeing in the busiest part of the market and prompted arguments in court that appeared to contrast with rhetoric in the jet market.

Airbus has outsold Boeing about four to one at the top end of the market for single-aisle jets, and Chief Commercial Officer Christian Scherer said last year the A321neo had "unmatched capabilities (and) operating economics".

In statements pre-filed to the court, however, Airbus said Qatar Airways could replace the cancelled A321neos with the rival Boeing 737 MAX, which it provisionally ordered in December, or Airbus jets that are available from leasing companies.

It was left to Qatar Airways to play up the unique characteristics of the A321neo but the airline faced repeated questions from the judge on whether it could rely on leasing firms or Boeing instead.

Statements filed in advance of the hearing shed new light on industrial planning and details of aircraft negotiations that are typically kept under wraps.

The case has also shone a spotlight on delicate relations between France, where Airbus is based, and one of its closest Gulf allies at a time when Qatar's role as a gas producer has come to the fore as Europe seeks to reduce its reliance on Russia.

Airline chiefs contacted by Reuters did not share Qatar's concerns over airworthiness of the A350 but voiced impatience over the A350 flaws as well as alarm over the dispute which has broken a consensus over safety and generated a trail of filings. "It is not good for the industry. They both need to get it out of the courtroom and find an agreement," the chief executive of one Airbus customer told Reuters.