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Scandinavian Airlines' parent company, SAS Group, accepted a $164-million (U.S.) settlement yesterday to resolve its claim that aircraft maker Bombardier Inc.'s Q400 turboprops were to blame in three crash-landings last year.

As part of the deal, SAS placed firm orders for 27 Bombardier aircraft, with options for 24 more, making the total value of orders potentially worth $1.75-billion.

Amid three crash-landings within seven weeks last year, SAS was forced to cancel Scandinavian Airlines flights and ground Q400s as it fought with Bombardier over whose fault it was that three of the turboprops experienced problems with their landing gear, supplied by Goodrich Corp. of Charlotte, N.C.

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Goodrich and Montreal-based Bombardier didn't say how much each contributed to the settlement, but they have vigorously defended the Q400's design, while SAS argued that its maintenance program didn't miss any checks.

Yesterday's agreement excluded any admission of fault, with SAS chief executive officer Mats Jansson going out of his way to praise Bombardier's product line.

SAS placed firm orders for 13 CRJ900 regional jets and 14 upgraded versions of Q400 turboprops, amounting to $883-million worth of aircraft. The original Q400 model was introduced in 2000, with SAS as the launch customer.

"It sounds a lot like face-saving, but it also serves both their purposes," said Richard Aboulafia, vice-president of analysis at Teal Group, an aerospace research firm. "SAS needs regional aircraft, and in this fuel environment, it's best to go with at least a few props. Bombardier, of course, gets to sell planes."

The Q400s, which evolved from the successful Dash 8 series, carried about 5 per cent of SAS's passengers. SAS, which has more than 300 planes across its fleet, signed leases for 26 of the Q400s and bought one of them.

"This milestone agreement represents a huge order for 27 Bombardier regional aircraft and, at the same time, settles the claim regarding last year's incidents," Bombardier spokesman John Arnone said.

Bombardier's 90-seat CRJ900s are assembled in Montreal, while the 70-seat Q400s are built at the firm's Downsview plant in Toronto.

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Scandinavian Airlines itself will take delivery of CRJ900 jets to replace its Q400s, but other SAS units will fly the next-generation turboprops.

Mr. Jansson welcomed the compensation, consisting of credit for aircraft orders and also cash.

"We are very satisfied with the settlement with Bombardier, a leading manufacturer of regional aircraft," he said during a news conference that was webcast from Sweden. "The firm order for 27 aircraft will bring a rejuvenated premium product to our customers."

Steven Ridolfi, president of Bombardier Regional Aircraft, welcomed the deal to extend the partnership with SAS.

The "next generation" Q400, dubbed NextGen, will feature larger overhead compartments and other enhancements.

"We are also very pleased that SAS and its affiliates have chosen our NextGen family, both turboprops and jets, to augment their fleets," he said in a statement.

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Toronto-based Porter Airlines Inc., which has taken delivery of six Q400s since launching flights in 2006, has ordered another six, Porter president Robert Deluce said.

"In less than 12 months, we'll have a dozen Q400s," he said in an interview from Toronto City Centre Airport, where the carrier is based.

"Our view has always been that the Q400 is reliable and fuel-efficient."

BOMBARDIER (BBD.B)

Close: $5.28 (Cdn.), down 2¢

Q400 controversy

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Oct. 27, 2007

In the third crash-landing incident within seven weeks, a Bombardier Q400 turboprop operated by Scandinavian Airlines slides down the runway on its belly at Copenhagen's airport after the right landing gear malfunctions. All 44 people on board are evacuated without injuries. A day later, Scandinavian's parent SAS Group drops fleet of 27 Q400s from service within the group.

Oct. 31

Goodrich's Jack Carmola, whose firm supplies landing gear, says the cause of Oct. 27 crash appears to be debris in the landing gear mechanism.

Nov. 5

Bombardier says the findings of a Danish probe into the Oct. 27 crash landing support the company's stance that the Q400 is safe. An "O-ring" could have "unknowingly" been transferred "by maintenance personnel" to a spot where it could move through the hydraulics and eventually block the valve that caused the gear failure, says Denmark's Accident Investigation Board.

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Nov. 22

Although Scandinavian has grounded its fleet of Q400s, Bombardier says no other carriers have halted use of the aircraft.

March 10, 2008

Scandinavian orders Bombardier CRJ900 jets. SAS Group says it has reached $164-million (U.S.) settlement with Bombardier and Goodrich regarding the landing-gear incidents. As part of the deal, SAS approves an order for 27 aircraft for Scandinavian and its affiliates, with an option for a further 24. Scandinavian and Estonian Air will use the CRJ900 jet; Wideroe and airBaltic will use the Q400 turboprop.

Source: Globe and Mail,

Bombardier, SAS

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