LONDON – Airbus has signaled it would sue airlines that are not taking delivery of new aircraft. This has led to an increase in tensions between the manufacturer and carriers.
Planemakers and leasing agencies have received multiple requests from airlines to delay deliveries due to the fall in demand as a result of Coronavirus.
Airbus’ warning about legal action came from Chief Executive Guillaume Faury in an interview with Politico, where Airbus announced that May deliveries were well below normal despite having a partial increase to 24 aircraft.
Mr. Faury told Politico that some airlines had refused to take calls at the height of the crisis, yet stating that he remained hopeful that some form of compromise will occur.
Mr. Faury stated, “It will remain, I hope, the exception” as he emphasized that Airbus will “always try to find a different route than going to court.”
However, Mr. Faury did add that when airlines have no other choice than fully defaulting and not proposing something better than nothing, lawsuits “will happen.”
Aviation industry sources admitted that public warnings like this are not very common in the aviation market and that it could end up backfiring for Airbus.
However, it was noted that Airbus is bracing itself for another chaotic event such as the 2001 collapse of large Airbus customer, Swissair (SR).
Threats from Qatar Airways
Despite previous good relationships with both Boeing and Airbus, Qatar Airways (QR) warned both manufacturers to defer deliveries or face a loss of future business, without adding if it had received any formal notices.
Default or Formal Notices
A default or formal notice is more common in the aviation industry than the initiation of long and costly court cases. However, despite this, they are still issued, albeit hesitantly, as they can trigger issues in financing contracts.
Despite this, in a deliberate signal to the market, last month Airbus placed six aircraft initially intended for AirAsia (AK) up for sale. Sources at the time of writing say that no buyer has been found. Airbus refused to comment.
To sum up, Aviation banker turned independent adviser, Bertrand Grabowski, said that “too many airplanes were produced for too many airlines” and that these airlines lacked a solid business model or financial strength to “deliver the growth embedded in their order books.”