SAS Changes its Mind about the Q400

posted: 10 March 2008 03:51 pm ET

: SAS Group retired a fleet of 27 Bombardier Q400 turboprops four months ago following three landing-gear-collapse incidents. Now, after obtaining compensation for the incidents from Bombardier and Goodrich, SAS has ordered 27 new Bombardier aircraft, among them 14 upgraded Q400s that feature a new landing-gear design. Credit: Bombardier Aerospace

Four months after saying it would stop operating its fleet of 27 Bombardier Q400 turboprop regional airliners permanently following three Q400 main-landing-gear collapses in the space of a few weeks, SAS Group has ordered new aircraft of the same type.

SAS Group today ordered 27 Bombardier aircraft, more than half of them Q400s.

Since the three incidents last fall, SAS Group—which owns the airlines Scandinavian Airlines, Norway's Wideroe Flyveselskap, Latvia's airBaltic and which is a part-owner of Estonian Airlines—has negotiated to obtain financial compensation from Bombardier, which makes the Q400, and U.S. company Goodrich, which manufactures the aircraft's landing gear.

Now, in a complicated settlement, Bombardier and Goodrich have agreed to compensate SAS Group "slightly more than 1 billion" Swedish krone (approximately $164 million) in connection with the landing-gear incidents, according to SAS.

However, the settlement agreement also includes approval by SAS Group's board of directors for a new firm order of 27 new Bombardier airliners, and purchase options on another 24.

Of the 27 ordered aircraft, 13 will be 90-seat CRJ900 NextGen regional jets, and 14 will be new 68-to-78-seat Q400s, also built to Bombardier's latest NextGen standards. The optioned aircraft include 17 CRJ900s and seven Q400s.

The new deal means SAS once more will be ordering an aircraft type it recently stopped operating. However, Mats Jansson, SAS Group CEO, said in a press conference that the Q400 NextGen model has been modified in several ways from the earlier Q400 model and one of the improvements is that its main landing gear design is different to the one involved in the three gear-collapse incidents last fall.

SAS will receive its $164 million compensation from Bombardier and Goodrich in the form of a cash payment and credits for the new firm order and options. SAS quotes a list price of $474 million for the 13 CRJ900 NextGens it has ordered—which equates to an average list price of just under $36.5 million per plane—and $356 million for the 14 firm Q400 NextGens, implying an average list price of a little more than $25.4 million per aircraft.

The 27 new jets and turboprops "will replace the earlier-operated Q400 fleet and other aircraft within the SAS Group," SAS said in a statement. The CRJ900s will be operated by Scandinavian Airlines and Estonian Air, with Wideroe and airBaltic taking the Q400 NextGen aircraft. Deliveries of the new aircraft to SAS Group will begin this fall and will continue until 2011.

Previously, Scandinavian Commuter, Scandinavian Airlines' regional-airline division, operated 23 of the 27 Q400s that SAS Group retired. Wideroe operated the other four. SAS didn’t immediately make clear how many aircraft from the new order it would distribute to the SAS Commuter operation, or whether it would arrange its operations differently as a result of the new deal.

However, Jansson did say that "the CRJ900 and Q400 NextGen aircraft are well-suited to our operations in Northern Europe, where our customers expect comfortable and environmentally friendly travel."