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Airbus Threatens to Sue Airlines Following Calls to Defer Deliveries
Airbus does not appear poised to retreat from an escalating dispute with the airlines over outstanding aircraft orders, as the European aircraft manufacturer announced this week that taking legal action will be the last resort if the airlines do not compromise.
Guillaume Faury, the chief executive officer of European aerospace corporation Airbus, warned that failure to comply with order specifications or violation of contract terms regarding aircraft orders might result in a lawsuit against airlines struggling to protect their businesses in the midst of coronavirus crisis.
Airbus chief executive Guillaume Faury claimed that some airlines, which he did not name, did not return the manufacturer’s calls in an interview with Politico on Friday.
“It will remain, I hope, the exception because we always try to find a different route than going to court,” Faury said. “But if and when airlines – and it’s happening – have no other choice than fully defaulting and not proposing something better than nothing, or are not willing to do it, then [lawsuits] will happen.”
The world’s largest aircraft manufacturer’s warning to use legal instruments, nevertheless, came as Qatar Airways CEO Akbar Al Baker earlier this week publicly called on Boeing and Airbus to defer deliveries until at least 2022.
“We are negotiating with both Boeing and Airbus to fulfill our requirement to defer, and we hope that both the manufacturers will oblige,” Al Baker said. “They have no other alternative to oblige and if they make it difficult to oblige we will keep them in mind and we will not do business with them again.”
“What is important is for Boeing and Airbus to show their customers that they are not only there with them in good times, but also in bad times.” added the chief of the Gulf carrier.
The Doha, Qatar-based airline has placed 167 aircraft orders worth $50 billion including 10 Airbus A321LRs, 40 Airbus A321neos, 29 Airbus A350-1000 XWBs, 10 Boeing 777-8s, 50 Boeing 777-9s, 23 Boeing 787-9 Dreamliners and 5 Boeing 777F pending delivery.
Emirates, a regional rival of Qatar’s flag carrier, also said that it is unable to fulfill the outstanding orders. The world’s largest long-haul carrier is also reported to be considering to cancel five of its eight Airbus A380 double-decker orders.
As one of the parties of Airbus-Boeing duopoly dominating the global commercial aircraft market, Airbus does not seem to take the somewhat vocal airline CEO’s threats seriously. However, if in the long run Airbus and certain airlines do not reach a settlement over the aircraft orders, this might turn the tables on Airbus’s lead over Boeing, which has been hit by the grounding of its 737 MAX.
Meanwhile, the European planemaker released the review of aircraft deliveries and orders. Even though the company received no new orders in May, it delivered 24 aircraft — two A220-300s to Air Canada and 18 A320 family aircraft. Those included the first A320neo to European budget airline Wizz Air and four A350 XWBs. As of May 31, Airbus’s 2020 gross orders totalled 365 aircraft, and net orders stood at 299 aircraft, meaning there had been 66 cancelations on the books so far this year.
The company has registered 7,621 aircraft orders remaining to be delivered, comprising 527 A220s, 6,199 A320 family aircraft, 322 A330s, 564 A350 XWBs and nine Airbus A380s.
Boeing and Airbus, along with other aircraft manufacturers and lessors, have received requests from multiple airlines to delay or cancel orders to battle with the financial troubles caused by coronavirus pandemic that hit the aviation industry.
The companies are also struggling to overcome the unprecedented financial turmoil caused by coronavirus pandemic as order cancellations continue and new orders have come to a near halt. Boeing announced that it is cutting at least 12,000 U.S. jobs, including 6,770 workers who must take involuntary layoffs, while Airbus furloughed 6,000 employees in the midst of the coronavirus pandemic.
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