Airbus, Qatar trial to be split as A350 jet row rumbles on

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By Tim Hepher

LONDON (Reuters) -A $2 billion legal battle between Airbus and Qatar Airways looks set to drag through most of 2023 after a UK court split the case, amid a glimmer of hope that high-level contacts on the sidelines of the World Cup might yield a breakthrough.

The dispute over damage to the surface and lightning protection on A350 jetliners grounded by Qatar has led to months of legal manoeuvering between two of aviation's largest players and the unprecedented cancellation of large-scale orders.

Judge David Waksman ordered a trial set for next June to be split in two parts because of the sheer weight of disagreements, ensuring the unusually public industry saga rolls on for months.

The first part will focus on liability with the combined claims, estimated at around $2 billion, tackled later.

Qatar Airways says widespread paint cracking has exposed deeper damage on some A350 jets, prompting it to stop taking deliveries. Qatar's regulator has grounded at least 29 of the jets, citing unanswered safety questions, over the past year.

Airbus has acknowledged quality problems with its premier long-haul model but denies any risk to safety and has cancelled all outstanding new business with Qatar Airways, which has increased purchases from rival Boeing (NYSE:BA).

On Friday, the two sides clashed angrily over access to the affected planes with Airbus lawyer David Wolfson complaining with the aid of photographs that its experts had been forced to photograph jets from a distance "under the light of the moon".

He also accused the airline of engaging in a game of "switcheroo" to prevent its experts inspecting in-service jets.

Qatar Airways strongly denied failing to cooperate with inspections and said it had given whatever access was practical to jets on short notice as it hosts the World Cup soccer tournament.

"We do have to bear in mind that this is an operating airline," the carrier's lawyer Geraint Webb said.

WORLD CUP DIPLOMACY

The exchange - cut short by an apparently exasperated Waksman - is just one example of the breakdown in co-operation between Airbus and Qatar Airways, once a star customer and the first and largest buyer of Europe's premier long-haul jet.

The hearings have focused attention on a disintegrating business relationship at the heart of the $150 billion jet industry, sprinkled with accusations of bad faith on both sides.

Both sides have accused the other of colluding with their respective regulators, both of whom have declined to comment.

The latest court confrontation comes as France's progression to the World Cup final in Qatar increases high-level contacts that have previously been seen as the opportunity to explore room for agreement. So far there are no signs of a settlement.

French President Emmanuel Macron was welcomed at Doha airport on his arrival for Wednesday's semi-final by officials including Qatar Airways Chief Executive Akbar Al Baker, Qatar News Agency reported. He will also attend Sunday's final.

The welcome by Al Baker in his capacity as minister of tourism is seen as a signal that the dispute is between companies rather than affecting strong diplomatic ties, though some diplomats have said politics may weigh on the outcome.

Reuters reported last month that the dispute had risen to the attention of French and Qatari leaders, who discussed the issue last December during a previous visit by Macron to Doha.

"Every time there is contact there is an opportunity to improve the atmosphere," one person familiar with the case said, though others warned the two sides remain far apart.