Following a ferocious 18-month conflict that tore the top off the global jet industry, Airbus (AIR.PA) & 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.
The $2 billion dispute over surface defects on long-haul jets is resolved amicably and to everyone’s satisfaction. Airbus withdrew billion-dollar plane deals as a result of the conflict, and Qatar increased its purchases from Boeing.
Under the current agreement, the 23 unfulfilled A350s and 50 smaller A321neo orders that were cancelled have been reinstated, and Airbus is also anticipated to pay the Gulf airline several hundred million dollars while forgoing additional claims.
Financial information was kept private.
According to the businesses, neither admitted fault. Both parties agreed to renounce their rights, move forward, and collaborate as partners.
The agreement ends what amounted to an extraordinary public separation trial between titans of the $150 billion jet industry, which is typically close-knit and shrouded in secrecy.
Prior to the June trial, the two parties had amassed claims and counterclaims totalling roughly $2 billion.
The purchase, which followed growing political participation amid close connections between France, wherein Airbus is based, and Qatar was praised by French Finance Minister Bruno Le Maire.
It is the result of extensive collaboration. He said it is fantastic news for the French aviation industry.
Before the announcement, Airbus shares finished up 1%.
After paint cracks revealed holes in a sub-layer of lightning arrester 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.
Despite acknowledging quality issues, Airbus argued that the aircraft was safe, supported by European regulators, and accused the carrier of misrepresenting issues in order to obtain compensation.
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 acknowledgement that the issue was not covered by the manual and needed a new repair; and Airbus would maintain its stance on safety and avoid having to find a new home for its cancelled 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, had criticised Airbus’ decision to cancel the order.
Although some experts wonder if it could have reached the earlier schedule due to supply issues, Airbus claimed it had done its finest to avoid moving Qatar too far back in the queue.
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 on yearly basis, by the time the deal was reached. On the specifics of the deal, neither party spoke.
In order to provide the required repair solution and get Qatar’s 30 grounded jets back in the air, Airbus said it will now cooperate with the airline and authorities.
A settlement was officially announced after it was known that one would be reached as soon as Wednesday. An investigation in 2021 discovered that other airlines, all of whom claimed the A350 skin degradation was cosmetic, had also been impacted.
The controversy has drawn attention to the design of contemporary carbon-fibre jets, which don’t interact with paint as smoothly as conventional metal ones do, and has illuminated industry practices.