Airbus, Qatar Airways Conflict Escalates With A321neo Order Termination

Qatar Airways said Jan. 21 that it is “adhering to all of our obligations under all applicable contracts,” a day after Airbus confirmed it is terminating an order by the airline for 50 A321neos and as the two continue to fight over paint and surface degradation issues on the airline’s fleet of A350s.

“It is therefore a matter of considerable regret and frustration that Airbus has taken the apparent decision to expand and escalate this dispute,” the airline wrote in a statement. “We will continue to robustly defend our position in the legal proceedings.” 

Airbus said in a court filing that it has terminated a Qatar Airways order for 50 A321neos, a highly unusual step. Aircraft manufacturers typically only ever cancel commitments at their end and take aircraft off the backlog when customers default on pre-delivery payments (PDPs) or in cases like airline bankruptcies, where it becomes obvious that a customer will no longer be able to take delivery of aircraft.

According to the Aviation Week Network Fleet Discovery database, the A321neos were to be delivered from the second quarter of 2022 until 2030, meaning that the first aircraft must be well into the assembly process. After the delivery of the first aircraft in 2022, Qatar was scheduled to receive six in 2023 and five in 2024. Given how popular the model is, remarketing the A321neos should not be a problem, even though late configuration changes may cause issues for the first several aircraft.

The exact details and reasoning for the cancellation remain unclear for now. Airbus said in a statement late Jan. 20 that “we confirm we did terminate the contract for 50 A321s with Qatar Airways in accordance with our rights.” Qatar Airways stated in its own court filing that Airbus was not entitled to declare a cross-default based on the airline’s refusal to take delivery of more A350s—and presumably suspend PDPs and final rates due at the end of 2021—as long as the dispute continues. The comment seems to indicate that the A321neo PDPs per se were not an issue.

A350 Surface Degradation Video

In December 2021, Qatar Airways sued Airbus in front of the Technology and Construction division of the High Court in London over the surface degradation on a large number of the airline’s A350s. It is claiming $618 million for damages incurred up until Dec. 17, 2021, and another $4.2 million per day as the Qatar Civil Aviation Authority (QCAA) grounding of 21 A350s continues.

“We have sadly failed in all our attempts to reach a constructive solution with Airbus in relation to the accelerated surface degradation condition adversely impacting the Airbus A350 aircraft,” the airline wrote in a statement issued Dec. 20, 2021.

Qatar Airways upped the ante Jan. 21 with the public release of a video clearly showing the surface degradation at the heart of the court case. The video release came on the heels of the UK High Court’s agreement to a Jan. 20 request by the airline to expedite its case against Airbus regarding the A350s. The hearing will now take place in April. 

A350s operated by several different airlines—including Qatar, Cathay Pacific, Etihad, Finnair, Lufthansa among others—have been experiencing premature paint wear to varying degrees. Airbus claims that following a thorough investigation it has identified the two main root causes: differences in thermal expansion and lack of adhesion to titanium fasteners. The OEM is currently working on fixes.

Airbus says that “thermal cycling”—when the aircraft transitions between hotter and colder conditions, expanding and contracting the skin—can lead to early surface wear and even expose the expanded copper foil (ECF) which then gets damaged further without the protection offered by paint. One reason why the problem has been so acute for Qatar Airways is that its aircraft are exposed to particularly large temperature variations between cruise flight and time on the ground in the Gulf summer, the OEM argues.

The other issue is a phenomenon called “rivet rash,” where the paint does not stick well to the titanium fasteners; a problem also experienced by Boeing on its 787s.

Airbus says none of the surface issues are structural and there is no airworthiness impact whatsoever.

Qatar Airways CEO Akbar Al Baker has been very vocal in disagreeing with Airbus and several other A350 operators that say the surface degradation is just a “cosmetic” problem. 

“We don’t know if it’s an airworthiness issue,” Al Baker said at a recent Aviation Club meeting in London. “We also don’t know that it is not an airworthiness issue. This is also a conclusion that was accepted by EASA inspectors that came in and met our regulators.”

Safety Issue, Or Not?

EASA, however, stated in December 2021 that “Airbus has identified the root causes of the paint issue. Paint processes have been further optimized and additional enhancement initiatives have been launched in accordance with these findings.” An EASA spokesperson added: “We are in contact with Airbus on the matter and are aware that the root-cause analysis has not identified any safety issue that would have an impact on the continuing airworthiness of the affected aircraft.”

Airbus said on Dec. 9, 2021 that it is seeking an independent legal assessment of the situation and the damages “in the face of the ongoing mischaracterization of non-structural surface degradation on its fleet of A350 aircraft by one of its customers.”

“The attempt by this customer to misrepresent this specific topic as an airworthiness issue represents a threat to the international protocols on safety matters,” the manufacturer added at the time.

In documents for a court hearing, Airbus has since added that “there is no reasonable or rational basis” for the QCAA grounding decision. Airbus also claimed that Qatar Airways has engineered the grounding because of the fallout from the COVID-19 pandemic, saying it was in the airline’s economic interest to exaggerate the complaint and as a consequence to not take delivery of further aircraft. Bloomberg was first to report the latest developments.

Airbus also said that Qatar Airways is “in clear default of its contractual obligations” by not taking more of the A350-1000s it has bought. Two of them had been due for delivery before the end of 2021, while 23 more of the -1000s are on firm order.

A lawyer for Qatar Airways said at a Jan. 20 hearing that the grounding of 21 aircraft has very serious operational consequences for the airline, which is gearing up for the 2022 soccer World Cup that will begin in the country in November. The flag-carrier is also studying the consequences of the A321neo contract termination.