Qatar Airways seeks compensation from Airbus for A380 delay

FARNBOROUGH England Tue Jul 15, 2014 7:33pm EDT

FARNBOROUGH England (Reuters) - Qatar Airways will seek compensation from Airbus for delays in delivery of three of the European planemaker's A380 superjumbos, the Gulf carrier's chief executive officer said on Tuesday.

Akbar Al Baker also said at the Farnborough Airshow he was not in any hurry to sign a final order for 50 777X jets to be supplied by Boeing Co, leaving it uncertain whether the $18 billion deal would be completed at the high-profile event.

The airline had been expected to display its growth ambitions by showing off its first A380 and completing the order for Boeing's largest twin-engined jet at the July 14-20 show.

However, such events are also the venue for last-minute negotiations in which public positions sometimes evolve.

Qatar Airways is also in talks to buy a small number of Boeing 777 Freighters, people familiar with the matter said, asking not to be named because the talks are confidential.

The A380 delay with Airbus comes after Qatar Airways refused to accept the first three of 10 superjumbos it has ordered, citing problems mainly with the cabin.

Airbus said on Monday the issues included the flooring in part of galley areas for which there was no quick fix, though it was confident the problem would not affect its 2014 delivery target.

On Tuesday, Al Baker told reporters that as a result of delays in receiving A380s due in May or June, the airline had been forced either to use smaller planes or cancel frequencies.

"The loss of this has been very painful to Qatar Airways," he said in a briefing. He said Qatar Airways was entitled to ask for compensation after a 30-day grace period for "excusable" delays which had now expired for all three aircraft.

Asked whether he would seek compensation over late delivery of the world's largest jetliner, he said, "Yes of course."

He declined to say how big penalties might be, but said, "No amount of compensation will compensate any airline for the revenue loss an aircraft delay causes to its bottom line."

A spokesman for Airbus said, "Qatar Airways is a highly appreciated customer to us and we are looking forward to seeing the A380 flying in Qatar colours soon".

NOT THE FIRST CRITICISM

It is not the first time Qatar Airways' CEO has publicly criticized Airbus or Boeing over production problems or delays.

But the airline's frustration deepened after Airbus placed its own test plane on display rather than one in Qatar's livery.

"This was absolutely disappointing to Qatar Airways," Al Baker said, adding he would not be "bullied" by what he viewed as a possible attempt to pressure the airline into taking delivery of the jet, worth $400 million at list prices.

However, he said he was confident in Airbus's ability to deliver "at least one" A350, its newest jet family, by year-end as planned. Qatar Airways is the first customer for the A350.

On the 777X, Al Baker said there had been "protracted" talks with engine maker General Electric < GE.N> over the contract, adding it was normal to seek guarantees on engine performance.

"The GE engine that will be on the 777 will be very advanced with a lot of new materials being used (and an) upgraded design, so we want to make sure it will be the most efficient engine that has been built. It is quite natural that we make sure that every performance requirement is properly documented."

GE said it was confident of reaching an agreement.

"We are in very active discussions with Qatar Airways and progressing toward a resolution, in what is a traditional negotiation on a contract," a spokesman said.

"We have a long history with Qatar Airways and we are very confident that we will be able to reach all the terms."

Boeing declined to comment.

(Reporting by Tim Hepher; Editing by Mark Potter, Bernard Orr)

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