Qatar pulls Airbus deal, slams planemaker

Reuters, Tuesday 15 Nov 2011

Production delays and concerns over the design of the future A350 model prompt Gulf carrier to switch orders to Boeing, with chief saying Airbus is 'still learning how to make airplanes'

In this photo taken Monday, Nov. 14, 2011, a man talks on his cell phone in front of the Airbus stand at the Dubai Airshow in Dubai (Photo: AP)

Qatar Airways slammed the brakes on an expected US$6.5 billion deal with Airbus at the last minute on Tuesday, throwing the Dubai Air Show into disarray as the airline's head signed a deal with Boeing and told its European rival to go back to basics.

Chief Executive Akbar Al Baker said Airbus was "still learning how to make airplanes" in what observers at the air show read as a signal of further disappointment over delays and hesitation over the design of the future carbon-fiber A350.

Despite the rhetoric, sources familiar with discussions said negotiations were still ongoing and that there was still a chance a deal announcement could be made later on Tuesday.

Al Baker spoke minutes after Airbus canceled an announcement, which sources said involved a $6.5 billion order for five extra A380 superjumbos and around 50 fuel-saving A320neo passenger jets.

"We have reached an impasse with them. We thought we would conclude an agreement and make a large announcement," he told a news conference at which the company unveiled a smaller separate deal to buy Boeing two 777 freighters.

Airbus presented the move as a postponement and canceled media interviews as executives retreated to their air show base, but Al Baker said he was pessimistic about the chances of a deal.

"We have canceled the announcement. There is an impasse. If this is resolved, fine ... If not, then bye-bye," he said.

The upset was the latest in a series of twists that have made Qatar's influential order decisions one of the most keenly awaited parts of recent air shows.

Al Baker has overseen rapid expansion at the flag carrier but his 14-year tenure at the top of Qatar Airways has been marked by outspoken comments against both Boeing and Airbus.

"It seems this deal is too hot to digest," an embarrassed Airbus spokesman said in announcing the delay.

Airbus had been counting on an order surge on day three of the Middle East's largest air show to hit back at Boeing, which so far dominates with a $18-billion order from host airline Emirates for 50 of its 777 aircraft.

Airbus did announce the sale of A320neos to lessor Aviation Capital Group for $2.7 billion on Tuesday.

ACG Chief Executive Stephen Hannahs said the Pacific Life unit had access to capital because it was investment grade, but that conditions in the market were tough.

"The bank market, and the European bank market in particular, which has been a large supporter of the aviation sector, is undergoing a lot of stress right now," he said.

"I suspect for the next six months, you're going to see banks in the euro zone sitting on the sidelines -- they won't be active participants until they sort out their capital structure. So there are going to be challenges."

Airbus's misery handed an unexpected morale boost to Canada's Bombardier, which has been suffering headwinds in trying to market a new model for 110-130 seats.

It announced a provisional deal to sell 10 of the CS300 Series aircraft to Turkey's Atlasjet Havacilik worth $776 million.

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