Dividends and Dispute over flaws between Airbus, Qatar Airways reaches beyond Gulf

For most of us, we do not see the interiors of how buildings, cars or planes but we can see the exterior, which means if we are inspecting or looking at buildings, cars and planes and we see paint peeling, we know there is something off. In a car it might mean rust is -underneath, in a building we would suspect moisture behind the wall and in a plane – if you saw it do you really want to fly in the plane?

In an article by Tim Hepher and Alexander Cornwell of Reuters, there are 2 major manufacturers for airplanes – Boeing and Airbus and airlines buy planes from both countries. However if one is not up to standards, the airlines will buy more from the other company.

There is a dispute between Airbus and Qatar Airways over paint and surface flaws on A350 jets and at least 5 other airlines are having the same concerns. Airbus says there is no risk for the plane’s safety and has labeled the issue cosmetic. It may well be, but it is easy to see.

The real issue is every year, the material the planes use are lighter than before and the decision now contains carbon mesh. The carbon mesh is needed because carbon fiber is not conductive to lighting strikes. Also, unlike metal carbon does not expand and shrink as temperatures change. Paint does resulting in a tug of war between paint and the carbon mesh. Paint loses and peels.

Airbus is examining whether a system called Perforated Copper Foil would be a better alternative. The issue is what does a airline do with the peeling paint?

One alternative is order planes from the other manufacturer – Boeing, however Qatar Airways needs to planes for the World Cup to be played in November to December 2022.

Linking to dividend paying stocks, companies can deliver complex systems, but most people will only be able to tell if they work from the outside. Most people will not know the workings of a system, but look for tell tale signs, if they see it then they will know there is something wrong with a company. A number of years ago, an analyst went into a Sears store and saw a manikin wearing a dress but the stockings had runs in them. Nobody seemed to be concerned with the flaw, hopefully he saw it over a couple of weekends. It was a small thing, but then it lead to other decisions the company had made which lead to recommending selling the stock. If the company does not do the little things correctly, how is doing on the bigger aspects of the company?

There are more questions than answers, till the next time – to raising questions.

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