By Tim Hepher
LONDON (Reuters) -Qatar Airways and Airbus clashed in court on Thursday over the fate of billions of dollars of jet orders as their 25-year partnership unravelled in scenes resembling a corporate divorce trial.
The two sides have been locked for months in a dispute over damaged lightning protection within the painted skin of the A350 that Qatar says has forced it to ground jets and stop taking deliveries.
Their dispute widened to the industry’s best-selling model in January when Airbus revoked an order from Qatar for the smaller A321neo, declaring “enough is enough” after the public clash over A350 safety.
On Thursday, Qatar asked a UK judge to freeze the cancellation pending a full trial expected to be months away. The first A321neo is due to be delivered 2023. A lawyer for Airbus said a Boeing jet would be a suitable replacement, a statement which the airline noted was at odds with the plane maker’s marketing pitch.
The judge deferred a decision until at least April 26, when a further hearing is due on a separate issue in the intertwined A350 dispute.
The case has illustrated the delicate relations between France, where Airbus is based, and one of its closest Gulf allies. Qatar is a major gas producer and Europe is looking to reduce reliance on Russian gas.
Court filings have also shed light on industrial planning and details of usually secretive aircraft negotiations.
Qatar launched the A350, Europe’s answer to the Boeing 787 Dreamliner, with an order for 80 in 2007 to serve its Doha hub, becoming the jet’s biggest operator.
Since last year, however, it has grounded 23 of the jets, voicing concerns over problems with lightning protection exposed by cracked and bubbling paint.
It is suing Airbus for steadily rising compensation that now exceeds $1 billion.
“One would certainly not want to be sitting under a roof in that condition,” Qatar Airways’ lawyer Philip Shepherd told the court, referring to damage on the crown of the fuselage of A350s.
The world’s largest planemaker has acknowledged quality problems but insists damage is well within safety tolerances, noting European regulators consider them airworthy and other airlines keep flying them despite various degrees of similar findings.
Lightning strikes jets about once a year and the A350 includes a layer of copper foil to protect its lightweight carbon fuselage.
Airbus told the court relations with the Gulf carrier had “seriously broken down” after what it describes as a manoeuvre to win compensation and cover up weak demand for plane tickets.
Qatar says Airbus has failed to honour its promises and insists it desperately needs more planes to host the World Cup this year.
“Airbus considers that Qatar Airways’ conduct has broken relations,” Airbus lawyer Sonia Tolaney said.
The two sides had what amounted to an industrial custody row in court, arguing over whether they could work together on other planes still in the fleet or yet to be delivered.
The issue of co-operation is significant as the judge ponders whether to keep the A321neo deal alive for now.
Qatar also accused Airbus of tilting the argument by increasing the threshold for problems with the anti-lightning mesh allowed in the repair manual.
“That is simply making the goal smaller at their end, half way through the game,” Shepherd told the hearing.
Airbus said this misrepresented the facts but confirmed it had increased the maximum gap to 1,000 mm2 from 200 mm2 following engineering analysis.
‘NOT UNIQUE’
To decide on Qatar’s request for an injunction, the judge will also 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. Arguments in court appeared to contrast with rhetoric at air shows.
Airbus told the court 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.
The MAX has “comparable if not better range,” Airbus lawyer Tolaney said.
Last year, Airbus Chief Commercial Officer Christian Scherer said the A321neo had “unmatched capabilities (and) operating economics”. Airbus has outsold Boeing four to one at the top end of the market for single-aisle jets.
It was left to Qatar Airways to play up the “unique” benefits of the A321neo though the airline faced repeated questions from the judge on whether it could rely on leasing firms or Boeing instead.
Analysts say the largest MAX variant has less range than the A321neo, prompting Boeing to think about designing a new jet.
Airline chiefs contacted by Reuters did not share Qatar’s concerns over airworthiness of the A350 but voiced impatience over the plane’s sporadic surface problems and the breakdown of an industry consensus over safety.
“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.
(Reporting by Tim Hepher; Editing by Jan Harvey and David Gregorio)
