Aerospace & Defense

Airbus Loses 2 Orders, Boeing May Gain $7 Billion Fighter Sale

In the continuing soap opera that depicts the relationship between Airbus and Qatar Airways, the airline has cancelled orders for two more A320neos that were not delivered on time. And in another drama that has taken years to play out, Boeing Co. (NYSE: BA) may be on the verge of selling $7 billion worth of fighter planes to Qatar and Kuwait, according to an exclusive story from Reuters.

In early June, Qatar Airways CEO Akbar Al Baker cancelled an order for one A320neo of a total order of five because Airbus had failed to deliver the plane within a contractually specified number of days late. The two orders that were cancelled on Thursday were among the five.

Aviation Week reported that Al Baker told a press conference in Doha that the problems with the new aircraft have not been resolved. The airline has refused to take delivery of the new planes before hardware and software fixes have been made to the Pratt & Whitney PW1100G geared turbo-fan engines that enable the engines to operate at the very high temperatures in Qatar without requiring an extended cooling period before engine start-up.

The airline is also complaining about delayed delivery of the Airbus A350 of which it has received just three from an order of eight that should already have been delivered. Airbus’s problem with the A350 has been getting enough seats from its supplier to meet delivery schedules.

Al Baker also said that the airline is close to placing another large order for new airplanes, but he did not say whether Airbus or Boeing was leading the competition. The airline’s fleet includes planes from both makers and existing orders for an additional 132 Airbus planes and 60 Boeing 777Xs.

As for Boeing, the U.S. government appears about to approve an order valued at around $4 billion for 36 Boeing F-15 fighter jets destined for Qatar and 28 F/A-18E/F Super Hornets, plus options for 12 more in a deal worth $3 billion, with Kuwait. The sales reportedly have been approved by both the Defense and State Departments and now await approval from the White House.

The order from Qatar has been delayed for two years as U.S. officials have had to overcome opposition to the sale from Israel, which objected based on its belief that Qatar supports extreme Sunni Islamic groups. Israel expressed similar concerns about the proposed sale to Kuwait.

By law, U.S. foreign sales of military equipment may not upset what is known as the qualitative military edge (QME) Israel has been guaranteed. That concern apparently has been overcome.

The sale of military aircraft is critical to Boeing’s defense business headquartered in St. Louis. These two sales virtually guarantee that the company’s defense business will be around for several more years.

Boeing’s stock closed at $129.90 on Thursday, up about 0.4%, in a 52-week range of $102.10 to $150.59.

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