Qatar Air launches $600m airport legal claim

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Qatar Airways CEO Akbar Al Baker.

Qatar Airways CEO Akbar Al Baker.

Qatar Airways said on Saturday it will file a $600m legal claim against German Emirati joint venture construction company Lindner Depa Interiors (LDI) for causing a significant delay to the opening of the New Doha International Airport by up to a year.

The Gulf carrier said in a statement that LDI had undertaken to complete the construction of 19 airport lounges by the summer of 2012 in a contract worth over $250m, but failed to complete the project on time.

The $15.5bn airport was due to have opened this month but has now been put back to the second half of 2013.

Qatar Airways, set to be the airport operator, claimed LDI had "badly defaulted" with the delayed airport opening seriously affecting the airline’s expansion plans, causing huge revenue losses, increased construction costs and delay penalties, and more importantly, inconveniencing passengers.

LDI was described as having performed "extremely poorly" in executing the project and failing to meet construction targets.

The current Doha International Airport handles almost 20 million passengers a year, with over 80 percent of the passenger traffic generated by Qatar Airways alone.

Qatar Airways CEO Akbar Al Baker cited "extreme poor performance" and inability to execute the work within the time required for the project as the reasons for LDI’s contract being terminated, resulting in the legal action now being taken.

“We are extremely disappointed by the poor performance of LDI which has failed to carry out the contract in a timely manner which in turn has forced a delay of the opening of the New Doha International Airport by nearly a year,” said Al Baker.

“We have been badly affected as an airline with the delay impacting Qatar Airways’ expansion plans that include new aircraft deliveries and opening up new routes at the rate we want to and more importantly causing a lot of inconvenience to our passengers in addition to the revenue losses to the airline and its subsidiaries.

“Our subsidiaries have been also affected by this delay including Qatar Duty Free, the food outlets and the ground handling which had a negative impact on the revenues of the airline."

He added: “The current airport we are operating from is already full to capacity with virtually no room to grow. We relied on moving to our new home, the New Doha International Airport this month, but this has not happened.

“Operational trials of the new airport have been ongoing since the summer as everything was in place, but incomplete airport lounges proved a serious setback.”

Phase one of NDIA is slated to handle over 28 million passengers a year, with the capacity expected to more than double by the time the airport is fully operational in 2018.

Al Baker added that further claims against LDI were expected from other entities affected by this delay.

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Posted by: Archer

LDI have obviously " reserved their rights " whilst encountering delays in receiving the site.
Will be interesting to see which Legal Authority handles the case , assuming, QA is indeed the Client who has signed the contract directly with LDI and not the Main Contractor.

Posted by: Peter Hudson

The way the Qataris are going, they will soon have no one willing to work for them except the local carpenters!

playing hardball is not the best way to instill confidence in the minds of international contractors.

Good contractors are necessary to build world class projects and work in a collaborative fashion. . Qatar may have the money for now but they need to realize that to compete with Dubai they need a progressive mindset as well. Being unfair and hard assed will get them nothing

Posted by: Alex

I find it hard to believe that because of 250m of contract in a 15b project, a project would be delayed by a year. I saw it in Dubai when part of the new terminal was completed and bits and pieces not. Also it seems a bit one sided in my eyes. Al Bakar using the Media to blame LDI with accusations, but I am missing comments from people who actually work on site who say what they see every day. I am sure Al Bakar doesn't spend 24/7 on site, and those who show him around, surely won't tell him someone along the line screwed something up, even it is the main contractor. But lets see if we get some actual input from people on site.

Posted by: Kashif Chaudhry

I have been in Qatar for the last four years and the NDIA is just a mirage, the fault resides with not the contractors but the nuisance created by various authorities and that is why the work started late. End of the day Mr. Bakker needs to accept fault rather than file a law suite and claim damages? Happy the legal fee is still unaccounted for.

Posted by: NJM

Claiming $600 million from a $250 million contract can't be right. It would be a contractor trap or perhaps good business with questionable morality.

Where were all the Client's firms watching over this project, and how badly can a contrator perform before you limit your damages? And where is the Contrator's limited LD liability of 10%? Or is it that the last one leaving the party gets stuck with the bill?

Something is drastically wrong with this story.

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