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SAS says grounding Bombardier turboprops will cost up to US$63M

Oct. 29, 2007, Stockholm, Sweden - Scandinavian airline group SAS AB said Monday that its decision to pull Bombardier Q400 turboprops from its fleet after three crash landings will cost it up to US$63 million.


October 30, 2007
By By Karl Ritter

Oct. 29, 2007, Stockholm, Sweden – Scandinavian airline group SAS AB said Monday
its decision to pull Bombardier Q400 turboprops from its
fleet after three crash landings will cost it up to US$63 million.

SAS decided to stop flying its 27 turboprops on Sunday, a day
after one of its planes made an emergency landing in Copenhagen with
a landing gear malfunction _ the third such incident in seven weeks.

There were no serious injuries, but the SAS board said the
accidents had affected passengers' confidence in the planes and that
continuing to fly the turboprops could damage the airline's
reputation.

The airline _ the joint flag carrier for Sweden, Norway and
Denmark _ said it will replace the turboprops with other planes in
its fleet as well as with leased aircraft. SAS said the turboprops
represented about five per cent of its seat capacity.

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“An early estimate of the negative impact on the SAS Group
result is around 300 million to 400 million kronor (US$47 million to
US$63 million) for the remaining part of the year,'' SAS said in a
statement Monday.

The airline cancelled about 100 flights Monday and Tuesday
because of the decision, mostly out of Copenhagen.

SAS shares fell 4.4 per cent to 108.75 kronor ($17.07) in
Stockholm.

The carrier had earlier demanded 500 million kronor ($78.25
million) in compensation from Montreal-based aircraft maker
Bombardier Inc. for costs and lost income for accidents involving
the turboprops. It was not immediately clear if SAS would make
additional claims after Sunday's decision.

Bombardier said Sunday that it was “disappointed'' that SAS
pulled the planes because Danish authorities had not yet closed an
investigation into Saturday's crash landing.

The company stuck by an earlier assessment that found no systemic
problem with the landing gear. “Bombardier stands behind the Q400
aircraft,'' the company said.

In Saturday's incident, a turboprop with 44 people on board
crash-landed in Copenhagen when part of its landing gear collapsed,
with one wing scraping the ground in a shower of sparks. All
passengers and crew were evacuated safely.

The same type of plane crash-landed twice last month _ in Denmark
and Lithuania.

Despite SAS accidents in September, Australia's Qantas Airline
announced earlier this month it was buying 12 more of the 72-seat
planes in a deal valued at C$345 million for its regional subsidiary
QantasLink.

That would boot its fleet of Q400s to 21. Qantas also said it
would take purchase options on 24 additional Q400s, made at
Bombardier's Downsview plant in Toronto.