Airbus says it revokes Qatar order for 50 A321 jets as rift widens By

By Tim Hepher

PARIS (Reuters) – Airbus on Thursday raised the stakes in a dispute with one of its largest customers, Qatar Airways, over grounded and undelivered A350 jets by announcing it had revoked a separate contract for 50 smaller A321s the airline needs to open new routes.

The move is expected to deepen a dispute that moved closer towards a rare courtroom clash on Thursday, with a procedural hearing over Qatar’s claim for $600 million in compensation over A350 flaws pencilled in for the week of April 26 in London.

Airbus revealed it was walking away from the contract for A321neos in skeletal arguments presented during a scheduling session over the A350 dispute at a division of Britain’s High Court on Thursday, people familiar with the matter said.

“We confirm we did terminate the contract for 50 A321s with Qatar Airways in accordance with our rights,” an Airbus spokesman said following a filing setting out provisional arguments, reported earlier by Bloomberg News.

Qatar Airways is expected to fight the A321 contract’s termination, having said it plans to take delivery of the jets even though it is refusing to take more A350s until a dispute over surface erosion on the larger planes has been resolved.

The airline had no immediate comment on the A321 contract.

The A321 order stems from a deal first signed some 10 years ago which was then worth $4.6 billion at list prices. It was later modified to switch 10 of the A321s to a newer version.

Qatar Airways has said the A321s will help it launch flights to new markets where there is currently not enough demand for larger aircraft, but which are out of reach of smaller A320s.

GROUNDING DISPUTE

The two companies have been locked in a row for months over A350 damage including blistered paint, cracked window frames or riveted areas and erosion of a layer of lightning protection.

Qatar Airways says its national regulator has ordered it tostop flying 21 out of its 53 A350 jets as problems appeared,prompting a bitter dispute with Airbus which has said that whileit acknowledges technical problems, there is no safety issue.

Qatar Airways is seeking $618 million in compensation for the 21 grounded jets plus $4 million a day as the row drags on.

The Gulf carrier is also asking British judges to orderFrance-based Airbus not to attempt to deliver any more of thejets until what it describes as a design defect has been fixed.

Airbus has said it will “deny in total” the complaint and has accused Qatar Airways, once one of its most highly courted customers, of mislabelling the problem as a safety concern.

It has indicated it will argue that state-owned Qatar Airways influenced its regulator to ground the jets to win compensation, while Qatar Airways has questioned the design and accuses Airbus of failing to produce studies, the people said.

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