Actionable insights straight to your inbox


Airbus Ready To Sue Airlines That Don’t Honor Aircraft Contracts

Such public warnings are rare in the tight-knit aviation market, but the scale of the disruption is so great that Airbus is adopting a more aggressive stance.

Image source: Airbus

By Tim Hepher

PARIS (Reuters) – Airbus is ready to sue airlines that refuse to honor contracts to take aircraft, its chief executive was quoted on Friday as saying, raising the stakes in a stand-off between some manufacturers and airlines over the coronavirus crisis.

The warning came as Airbus prepared to unveil what industry sources expected to be another weak month of delivery data.

Planemakers and lessors have received multiple requests from airlines to delay deliveries due to the slump in air travel.

Airbus Chief Executive Guillaume Faury told Politico some airlines, which he did not identify, had refused to take calls at the height of the crisis, but that he hoped for a compromise.

“It will remain, I hope, the exception because we always try to find a different route than going to court,” Faury said.

“But if and when airlines – and it’s happening – have no other choice than fully defaulting and not proposing something better than nothing, or are not willing to do it, then (lawsuits) will happen.”

Industry sources said such public warnings are rare in the tight-knit aviation market and could backfire.

But they said the scale of the disruption is so great that Airbus is adopting a more aggressive stance, echoing turmoil over the 2001 bankruptcies of Swissair and Sabena.

It has sent out dozens of default notices to airlines in a step that can lead to lawsuits but undermine relations, the sources said. Some airlines have responded angrily in private.

Qatar Airways this week warned Airbus and Boeing to defer deliveries or face a loss of future business, without saying whether it had received any formal notices.

In a deliberate signal to the aviation market last month, Airbus unusually placed six planes originally intended for AirAsia, which has halted taking jets, up for sale. Financial sources said no buyer had been found.

Airbus had no immediate comment.

Deliveries have also been hampered by logistical problems caused by recent lockdowns.

Airbus is expected to confirm on Friday that deliveries remained under pressure in May, though some airlines are taking pre-financed aircraft.

Reporting by Tim Hepher; Editing by Mark Potter.


Source: Reuters

The implications of the dollar potentially losing its status as the global reserve are numerous. Obviously, there may be currency risks, and decreased demand for U.S. Treasuries could lead to rising interest rates. I would also expect to see massive commodity price swings.
Many of us economy-watchers have been expecting recession, though with significant differences on odds and timing. Regardless, recent banking developments just made recession more likely and may have accelerated its onset.
Many people think of position size in terms of how many shares they own of a particular stock. But it’s much smarter to think of it in terms of what percentage of your total capital is in a particular stock.