By Tim Hepher

LONDON, (Reuters) – Airbus and Qatar Airways have been scheduled to meet in court. This is as a result of a legal dispute over the billions of dollar worth of planes. It has triggered some nervousness among airline officials.

A UK judge will extend Thursday’s order to prevent Airbus from cancelling a contract that covers 50 A321neo planes. Fuller hearings are pending.

Airbus made the unusual step to halt the order in January as a retaliation against Qatar refusing delivery of A350s larger than they were.

Qatar grounded 23 A350 aircraft, raising concerns about the safety of cracks in lightning protection that was left open by bubbling and cracked paint.

Airbus is being sued by the company for steadily increasing compensation, now exceeding $1 billion.

Although the world’s biggest planemaker acknowledged some quality issues with its jets, it insists that the damage is within acceptable safety tolerances. He also noted that European regulators have declared them safe and allowed other airlines to continue flying them.

Reuters spoke to airline chiefs who did not agree with Qatari concerns about the A350’s airworthiness. However, they expressed growing concern over the size of the dispute that has disrupted a wide industry consensus regarding safety and led to a series of complex filings.

This is not good news for the aviation industry. Both parties need to come out of court and reach an agreement,” said the chief executive at one Airbus customer to Reuters.

Numerous industry leaders have offered mediation but there has been no sign of any breakthrough. However, neither side has closed the door on discussion. Airbus stated that it would like an “amicable” agreement.

The Thursday hearing will mark the beginning of an actual clash following online procedural sessions.

‘DANGEROUS GAME’

The unusual hearing was preceded by statements that shed light on industrial planning as well as details about aircraft negotiations, which are usually kept secret.

It has brought to light delicate relations between France and Airbus, which is situated in France. This comes at a time where Qatar’s role of a producer of gas is being highlighted, as Europe seeks less dependence on Russia.

Qatar requested an injunction to be considered. A judge will decide which side is most at risk if A321 is cancelled and how unique the aircraft is in its class. This is the central issue of Airbus’s fight for sales against rival Boeing (NYSE 🙂 in busiest parts of the market.

Airbus outsold Boeing by about four-to-one at the top of single aisle jet market. Chief Operating Officer Christian Scherer stated last year that the A321neo’s “unmatched capabilities” and its “unmatched operating economics”.

Airbus stated that Qatar Airways would replace its cancelled A321neos by a rival Boeing 737 MAX or Airbus jets, as it had pre-filed with the court.

This case also shows the risks involved in leasing companies managing an uneven recovery and waiting for their lease rates to recover from the level they had before the pandemic.

Airbus stated to court leasing firms that they are seeking homes for 80 A320s, 48 A321s, and other A320s by 2023. This is a significant number of A320s a year prior to delivery according market sources.

Bertrand Grabowski, aviation consultant said “It indicates that lessors believe there is a lease market going up and are holding back prior to placing airplanes acquired prior to the pandemic — but it’s dangerous.”

Qatar Airways also revealed previously secret details about its product plans, which included the pedal controls used to control the seats and the toilets, which were taken from the A380 superjumbo. These information are typically kept private until they are made available to the public in an extremely competitive industry like travel.

Following the London High Court’s proceedings this month, both sides will be meeting for the first time at June’s biggest annual airline event. The two-sided gathering was held in Qatar due to travel restrictions in China.

Willie Walsh of the International Air Transport Association stated on Wednesday that the dispute would not distract from his meeting. The meeting will be centered on the effect of the conflict in Ukraine.