Deal

Three informed sources said that the European Airbus company increased the risk of escalation in a dispute with Qatar Airways over damage to the paintwork on the surfaces of the A350 planes, by canceling a contract for a fourth plane.

The two companies are locked in a dispute over the impact of defective surface coatings on aircraft safety, with Airbus insisting the plane is safe, while Qatar Airways says there are unanswered questions regarding its airworthiness and is refusing to take delivery of the aircraft.

In May, a British judge rejected a request by Qatar Airways to force Airbus to formally stop trying to deliver more A350s to the airline, the airline’s largest buyer.

The procedural ruling means Airbus is free to try to trigger payment terms as more planes are built. It might also try to sell the A350s that Qatar has rejected to companies such as Air India, which aircraft industry sources say might appear as a buyer.

The deal for a fourth A350 was canceled in late June. This is expected to be reflected in Airbus’ first-half data due on Friday. A fifth plane is expected to meet the same fate by the end of July, followed by a sixth later this year.

Qatar Airways says Airbus is wrongly trying to deliver new planes, while the company says Qatar Airways has breached its contract by refusing to take more A350s and canceling orders for undelivered planes one by one as they are finished.

The two sides are due to meet in a London court on Thursday for the latest in a series of procedural hearings before the full trial, tentatively set for June next year, unless an out-of-court settlement is reached. Sources say this seems unlikely so far.