SAS Gets $164M In Compensation From Bombardier

Airline group ordered 27 new Bombardier aircraft in a deal that includes about $164 million in compensation for a series of crash landings that grounded its fleet of turboprops last year.

STOCKHOLM, Sweden (AP) β€” Airline group SAS AB said Monday it ordered 27 new Bombardier aircraft in a deal that includes about 1 billion kronor (US$164 million; euro106 million) in compensation to SAS for a series of crash landings that grounded its fleet of turboprops last year.
SAS also has an option for 24 more planes under the agreement, which comes after months of negotiations between the airline and Bombardier over compensation for the turboprop incidents in September and October 2007.
Bombardier said the value of the order was around US$883 million (euro573 million) and could increase to about US$1.75 billion (euro1.14 billion) if all options are exercised.
SAS dropped its 27 Bombardier-made Dash 8 Q400 aircraft from its fleet last year following three crash landings in Denmark and Lithuania in which the landing gear failed to extend properly.
There were no serious injuries, but SAS said the accidents had affected passengers' confidence in the planes and that continuing to fly the turboprops could damage the airline's reputation.
Bombardier defended its Q-400 aircraft and said there were no systemic problems with the landing gear.
SAS replaced the turboprops, which represented about 5 percent of its seat capacity, with other planes in its fleet as well as with leased aircraft.
The airline said Monday it would receive ''slightly more than 1 billion kronor'' (US$164 million; euro106 million) in compensation in a three-way deal with Bombardier and landing gear supplier Goodrich Corp.
SAS said the details of the agreement were confidential but revealed that it included both a cash payment and credits in the new aircraft purchase.
SAS Chief Executive Mats Jansson said Monday the airline was satisfied with the deal even though he said the airline incurred costs of between 1.4 billion (US$229 million; euro149 million) and 1.5 billion kronor (US$245 million, euro160 million) because of the turboprop problems.
''At some point we have to make a settlement and the time factor also plays a role, because the vacuum which we have filled with planes with too large capacity have financial consequences,'' he said.
''I think all three parties that have been involved in this feel that this is very satisfying,'' he added.
The new aircraft to be delivered by Bombardier will be CRJ900 NextGen jets and turboprop Q400 NextGen turboprops. They will replace the Q400-fleet and other aircraft within the SAS group.
The planes will be delivered between 2008 and 2011.
SAS shares fell 0.48 percent to 52.00 kronor (US$8.50, euro5.53) in Stockholm.
Sydbank analyst Jacob Pedersen said the compensation was ''a fair amount.''
''In a situation like this it is always very difficult to receive full compensation. This is as good as it gets,'' he said, adding the new planes were a good choice.
More in Supply Chain