Following a ferocious 18-month conflict that tore the top off the global jet market, Airbus (AIR.PA) and Qatar Airways announced on Wednesday that their disagreement regarding the A350 aircraft that had been grounded had been resolved. This avoided a potentially catastrophic UK court trial.
A $2 billion dispute about surface damage to long-haul jets is resolved by an “amicable and mutually satisfactory settlement.” Airbus withdrew billion-dollar plane deals as a result of the conflict, and Qatar increased its purchases from Boeing.
Under the terms of the new agreement, canceled contracts for 23 unfulfilled A350s and 50 smaller A321neos have been reinstated. Airbus is also anticipated to pay the Gulf carrier several hundred million dollars while forgoing additional claims.
Financial information was kept private.
According to the businesses, neither admitted fault. Both promised to renounce their grievances and “go ahead and work together as partners.”
The agreement ends what amounted to an extraordinary public divorce trial between titans of the $150 billion jet industry, which is typically close-knit and shrouded in secrecy.
Before the June trial, the two parties had accumulated claims totaling roughly $2 billion.
The purchase, which followed growing political participation amid close connections between France, where Airbus is based, and Qatar, was praised by French Finance Minister Bruno Le Maire.
“It is the result of extensive collaboration. Good news has arrived for the French aerospace sector “said he.
After paint cracks revealed holes in a sub-layer of lightning protection on its latest generation of A350 carbon-composite aircraft, Qatar Airways took the extraordinary step of openly suing the world’s largest aircraft manufacturer over safety.
Although acknowledging that the jets had quality issues, Airbus argued that they were safe and supported by European regulators, and charged the airline with misrepresenting the problems in order to obtain compensation.
DAMAGES
Both sides, supported by an expanding army of attorneys, sparred over document access at preliminary hearings, to the increasing annoyance of the judge who was eventually obliged to order cooperation.
Analysts predicted that the settlement would give both parties a sense of vindication: Qatar Airways would receive damages and acknowledgment that the issue wasn’t caused by the manual, while Airbus would maintain its stance on safety and avoid having to find a new home for its canceled A350 aircraft.
Qatar will finally receive the in-demand A321neos it needs to plan its growth in 2026, though three years later than anticipated. Separate from the contentious A350 contract, IATA, the international association of airlines, criticized Airbus’ decision to cancel the order.
Airbus claimed that it had tried its best to keep Qatar from being moved too far back in line.
The agreement is also anticipated to put an end to a claim for compensation for grounding that had been accruing $6 million per day due to a condition enacted after repainting a plane for the World Cup showed major surface damage.
According to court documents, Airbus’ theoretical liability, which was initially estimated at $200,000 a day per plane, had increased to a total of $250,000 per hour for 30 jets, or $2 billion annually, by the time the deal was reached. On the specifics of the deal, neither party spoke.
In order to get Qatar’s 30 grounded aircraft back in the air, Airbus said it would now cooperate with the airline and authorities.
A settlement was officially announced after Reuters said one would be reached as soon as Wednesday. Other airlines were found to have experienced A350 skin degradation in 2021, despite all of them claiming it was only “cosmetic,” according to a Reuters investigation.
The controversy has drawn attention to the design of contemporary carbon-fiber jets, which do not interact with paint as smoothly as conventional metal ones do, and has illuminated industry practices.
