Qatar and Airbus Poised to go Head to Head​

By Jake Rickman​

What do you need to know this week?

Airbus is preparing to defend itself from a claim Qatar Airways filed against the European plane manufacturer in December of last year for breach of contract.

The dispute stems from the fact that, following a repainting job of some of Qatar’s fleet of A350s in November of last year, Qatar uncovered certain defects in the plane. The airline ultimately had to ground 21 of its A350s and make hundreds of “patch repairs” to the damages.

Qatar is alleging that Airbus is responsible for the defects and is refusing the delivery of additional Airbus planes. The Qatari airline is seeking $700m in damages.

Airbus has since counter-claimed against Qatar for the airline’s refusal to take delivery.

Why is this important for your interviews?

Many of us are taught that there are two kinds of law: transactional and contentious. While many lawyers specialise in one, this story reminds us that fostering our commercial awareness is not just limited to high stakes transactional deals.

This dispute has the aviation industry’s attention because aeroplane manufacturers like Airbus and its main competitor, Boeing, tend to avoid disputes with its customers at all costs. In many cases, it is simply not worth litigating against the other party. Manufacturers and airlines tend to be well-insured. It is also because the airline industry is a small world, relatively speaking, and economies of scale inherently limit the number of viable commercial airline manufacturers.

More generally, while there is no guarantee either party will be awarded the damages they are claiming, the potential awards are eyewatering. No doubt, this casts a substantial shadow over the future financial strength of both companies. So much that if this case proceeds in the High Court, it could alter the strategic course of both businesses.

Put another way, this could be an example of a so-called “bet your business” litigation case (for another example, see Cineworld vs Cineplex in Canada). While neither party may necessarily become insolvent if they lose, it could hamper their long-term plans, such as limiting any acquisitions in the future.

How is this topic relevant to law firms?

Lawyers obviously have the monopoly on representing clients in court (you don’t want your investment banker preparing your accountant to advocate on your behalf in court right before a trial!). But at a more fundamental level, the decision to litigate a claim should ultimately be a commercial one. That means that in addition to evaluating the legal merits of a claim, solicitors should help their clients consider the wider strategic implications.

Not only is litigation itself quite expensive, but it can also expose both parties to undesired public scrutiny. Likewise, this dispute between Qatar Airways and Airbus will likely impact the relationship between two prominent figures in the airline industry and may influence the wider market. These were likely some of the wider commercial considerations the legal advisers to both parties brought up when evaluating the merits of each’s case.


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