A Qatar Airways Airbus order has been canceled, allegedly because of late delivery. Airbus now has four 238-seat jets worth $1.2 billion (£1 billion) on its hands and nowhere for them to go. This is a big blow for Airbus, who is trying to catch up on American rival Boeing.
Airbus will now be forced to try to sell these four passenger planes at cost to at least recoup its investment in manufacturing them. There is a shrinking demand at the moment for large jets, particularly those fitted with luxury interiors as Airbus is. It is highly unlikely that there will be a queue of potential bidders, because other cancellations may be in the pipeline.
There are a few reasons for the cancellation. One is cabin equipment quality issues, and Airbus admitted to having known supply chain issues. Qatar Airways also maintains that the order was late. Qatar is particularly fussy about detecting quality defects prior to delivery.
However, coincidentally, this issue arises at a time when Qatar Airways is suffering because of a ban on its use of the airspace of four other Arab nations. It is now coming up to the second month of this which is hitting Qatar Airways hard. Airbus stated that the rejected Airbus A350-900 aircraft will be ‘reallocated’.
The Gulf airlines, in general, have been spending a lot of money on wide-bodied passenger aircraft. However, falling oil prices have been hitting their purses. The Qatar Airways Airbus cancellation has hit the latter badly. Nevertheless, a deal made on Wednesday for China to buy 140 Airbus jets will sweeten the situation for the French aircraft manufacturer.
It has been trying to fight off competition from Boeing lately. January to June Boeing had clinched 407 net orders this year and Airbus only 248 net. Net means after cancellations. Airbus had 45 cancellations (18.1% of orders) and Boeing 46 (11.3%). After a management reorganization, Boeing has been becoming stronger of late.
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