Frustrated Qatar Airways backs out of Airbus order

Qatar Airways Chief Executive Akbar Al Baker said the airline had walked away from its first Airbus Group SE A320neo aircraft order because of delays in receiving the jet.

Qatar Airways was due to receive the first plane last year. But Airbus and the plane's engine maker, United Technologies Corp, have struggled to get the A320neo up to the performance standard contractually required.

Mr. Al Baker said the airline could walk away from more A320neo orders once contractual walk-away clauses are triggered.

"It’s making a huge impact on my bottom line," Al Baker said. "We’re quite frankly screaming." The airline should have had five A320neos in service by now under original plans, he said.

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 planemaker said.

"This isn’t about compensation," Al Baker said, adding that the relationship with the 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.

Some issues could drag into next year, he said. "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. and France's Safran SA. A further fallback is buying the current versions of the Boeing Co. 737s instead and then upgrading to the 737 Max, the direct competitor to the A320neo, Al Baker said.

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 Fabrice Bregier, the head of Airbus's planemaking unit, to resolve issues. Delivery of the first of the delayed plane is "imminent," he said, with 10 of the planes due to be delivered to Qatar Airways still this year.

Rival Boeing is delivering planes early, sometimes before the airline need them, Al Baker said. Airbus was not immediately available for comment. Al Baker also said he's not seeking a board seat on International Consolidated Airlines Group SA. Qatar Airways recently boosted its stake in IAG to just above 15%.

It was already the largest shareholder in the British Airways parent. Al Baker says he has confidence in the current board, so sees no need to seek a board seat. He doesn't plan to increase the stake in IAG for now.

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

Negotiations could be extended one or two months, but he expressed concern that the current owners might not put more money in Meridiana after the end of this month.

If talks fail, about 4,000 jobs at the carrier would be at risk, 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.

Courtesy: marketwatch.com