Qatar Airways Walks Away from Airbus A320neo Order Over Delays

Employees work on the fuselage of Airbus A320 aircraft in Hamburg, Germany. Concerns over engine performance have delayed delivery of the first Airbus A320neo models, frustrating launch customer Qatar Airways. ENLARGE
Employees work on the fuselage of Airbus A320 aircraft in Hamburg, Germany. Concerns over engine performance have delayed delivery of the first Airbus A320neo models, frustrating launch customer Qatar Airways. Photo: Krisztian Bocsi/Bloomberg News

DUBLIN—Qatar Airways Chief Executive Akbar Al Baker said the airline had walked away from its first AirbusGroup SE A320neo aircraft order because of delivery delays.

Qatar Airways had ordered 50 A320neo family planes, making it the launch customer of the model. The airline was due to receive the first plane last year, which it will not now take.

Airbus and the plane’s engine maker, United Technologies Corp. UTX -0.48 % (UTX), have struggled to get the A320neo up to the contractually required performance standard, resulting in considerable delays.

Mr. Al Baker said the airline should have five A320neos in service by now under the original agreement. “It is making a huge impact on my bottom line,” the CEO said. “We are quite frankly screaming.”

Mr. Al Baker also suggested Qatar Airways could walk away from more A320neo orders once contractual walkaway clauses are triggered.

Fabrice Brégier, the head of Airbus’s planemaking unit, said “we are late compared to what we had promised, especially for launch customers. I fully understand why these customers are not satisfied,” he said, though he declined to discuss contractual issues.

Airbus has said it is working on improvements to the A320neo to address concerns about engine performance. A software upgrade to deal with spurious fault warnings has already been put in place, the plane maker said.

“This is not about compensation,” Mr. Al Baker said, adding that the relationship with Airbus is strained at the operational level.

He expressed concern about Airbus’s promises to get fixes in place, noting that deadlines have been missed and saying some issues could drag into next year. “We need a really, really firm answer,” he added.

Qatar Airways said it would consider buying A320neo jets with the alternative engine made by a joint venture of General Electric Co. GE -0.28 % and France’s Safran SA SAF -1.31 % .

A further fallback is buying the current versions of the Boeing Co. BA 0.07 % 737s instead and then upgrading to the 737 Max, the direct competitor to the A320neo, Mr. Al Baker said.

Mr. Al Baker also bemoaned Airbus delays with its A350 long-range jet. Three of the airlines’ planes have been delayed since February, he said.

He noted that he had met with Mr. Brégier to resolve issues. Delivery of the first of the delayed planes is “imminent,” with 10 of the planes due to be delivered to Qatar Airways this year.

Mr. Brégier said Airbus would aim to meet its delivering commitment, but acknowledged “it will be challenging.”

Rival Boeing is delivering planes early, sometimes before the airlines need them, Mr. Al Baker said.

Mr. Al Baker also said he would not be seeking a seat on the board of International Consolidated Airlines Group SA ICAGY -0.83 % .

Qatar Airways recently boosted its stake in IAG to just above 15%, having already been the largest shareholder in the British Airways parent. However Mr. Al Baker says he has confidence in the current board, so sees no need to seek a board seat. He also revealed he doesn’t plan to increase the stake in IAG for now.

Qatar Airways is also in talks to take a stake in Italy’s Meridiana airline, with a deadline to conclude talks by month’s end. Mr. Al Baker said an agreement on reforming the airline hasn’t been reached.

Negotiations could be extended by one or two months, but he expressed concern that the current owners might not increase their investment in Meridiana after the end of this month.

If talks fail, about 4,000 jobs at the carrier would be at risk, Mr. Al Baker said.

Qatar Airways’ plans to take a stake in Royal Air Maroc have been delayed as the airline has focused on completing the deal with Meridiana.

Write to Robert Wall at [email protected]


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