Monday, November 12, 2007
EASA Q400 Meeting Clears Aircraft
The findings come as a great relief to Bombardier and operators, one of which – Pinnacle – was cross questioned on the aircraft during its recent investors meeting. CEO Phil Trenary assured investors that problems associated with the aircraft were the result of maintenance problems at SAS, seemingly confirmed by the EASA statement.
Just before the meeting Bombardier, citing the latest findings from a Danish Accident Investigation Board into the Q400 problems experienced by SAS, pronounced its popular turboprop vindicated after the preliminary accident investigation report revealed debris – a piece of rubber – was stuck in the right main landing gear preventing it from deploying. It seems SAS recently replaced a door valve 0-ring resulting in a blockage of a restrictor valve in the actuator assembly of the right main gear. The investigation revealed that the 0-ring may have been unknowingly transferred by maintenance personnel. However, it is continuing its investigation.
The problem resulted in a masterful crash landing by SAS pilots. Related Story Despite the citation of its own maintenance practices by Danish authorities, SAS appears to be standing by its decision to permanently spin its 27 Q400s out of its fleet. The authorities cited a maintenance error as leading to the landing-gear actuator blockage in the most recent incident. Should maintenance remain the cause of the two September accidents, then SAS’s $77 million claim against the Canadian manufacturer will not likely be sustained. However, Danish authorities are still investigating the root cause of the corrosion found on the inside the actuator pistons.
Steven Ridolfi, president of Bombardier Regional Aircraft, said that the investigators' latest findings "clearly support Bombardier's position that the Q400 is a safe and reliable aircraft. Airlines and other operators around the world continue to express their complete confidence in the Q400 turboprop and I thank them for their strong support," Ridolfi added.
SAS Action Causes Temporary Blip in Values
The grounding of 27 Q400s by SAS has led to a temporary fall in the value of the type, according to RAN’s sister publication Aircraft Value News. Editor Paul Leighton called SAS’s withdrawal of is Q400 a significant event. “Not only will some 27 examples come onto the market, perhaps through Bombardier, but the reputation of the aircraft will be impacted, at least in the short term,” he said before EASA made its announcement. He noted that Bombardier, and its landing gear suppliers, have reacted swiftly. The the occurrence of a number of landing-gear-related issues within such a short period of time with a single operator is having a short-term impact on confidence.
Leighton’s analysis also said:
The incidents suffered by SAS, a major company and employer in the region, have been high profile news in Scandinavia. Having previously grounded the Q400, along with other operators, to undertake inspections, and then reinstated the type only to suffer another failure, confidence in SAS and the type waned. To restore confidence meant making more than a gesture and the Q400 was withdrawn from service by the SAS board, permanently. The situation faced by SAS was therefore peculiar to the airline. Other operators, not having experienced high profile incidents of SAS nor the media attention, have seen sustained passenger numbers and continue to fly the aircraft. All but one of the Q400s operated by SAS are leased.
The market for turboprops remains strong with ATR even contemplating a replacement.
There are some 160 Q400s in operation with another 100 still on order. The 27 of SAS, therefore, represents nearly 17 percent of those in service. For turboprops an availability level of 10 or more percent is indicative of a surplus. Placing 27 aircraft will require acquisition from perhaps three or more operators. The immediate availability of 27 five- to eight-year-old, Q400s at a price or lease rate considerably less than that of a new aircraft, will spark interest. There are already reports that some three airlines in Europe and others in Canada and South Africa are interested in the aircraft. This suggests that disposal may be relatively easy.
However, there has to be recognition that the acquisition of used Q400s still carries some risks. Should the type suffer another incident within the next six to 12 months, the media attention will likely be sufficiently significant such that passenger confidence among other operators may suffer. There will therefore need to be a sense of realism with respect to values of the Q400 in the very short term and a discount of 12 percent compared to pre-grounding current values is considered appropriate. Such a reduction in value will likely persist only so long as there are five to 10 of the SAS aircraft still unplaced. The acquisition of the majority of the SAS aircraft will underline other operator confidence and return a measure of balance to the supply and demand equation. The residual value projections for the Q400 are not expected to be impacted unless there is wider incidence of operator-specific groundings.
As an illustration of how resilient values are to incidents and accidents, in the 1990s ATR aircraft suffered from icing issues which resulted in fatalities. The high-profile incidents temporarily affected passenger confidence in turboprops after excessive media attention but equilibrium was restored as incidents waned.