EoW January 2008

Taking a broader view, Deutsche Bank analyst Rod Lache said that he was standing firm on his buy rating on GM stock, telling clients he was surprised by the strength on the auto side of the business. ( MarketWatch, 7 th November) “North America and Latin America were significantly better than expected,” Mr Lache told MarketWatch reporter Shawn Langlois in San Francisco. “Asia was on target. Europe was disappointing.”

On 9 th September, an SAS Q400 caught fire in Aalborg, Denmark, after its landing gear failed. Five of the 69 passengers were injured. Three days later, part of the landing gear of an SAS Q400 collapsed upon touchdown in Vilnius, Lithuania. (“SAS Will Stop Using Q400 Planes after Crash Landing,” 28 th October) Bloomberg ’s Christian Wienberg and Niklas Magnusson wrote that SAS was trying to lease planes to limit cancellations, which totalled 53 for the single day on 28 th October. SAS said it would claim at least $157 million from Bombardier as compensation for lost revenue and damage to its reputation. “Confidence in the Q400 has diminished considerably,” Chief Executive Officer Mats Jansson said in the SAS statement. “Our customers are becoming increasingly doubtful about flying in this type of aircraft.” SAS was in cancellation difficulties even before the accidents, having had to scratch more than 2,000 flights as a result of staff walkouts in Sweden, Denmark, and Spain – at a cost of about $47 million in earnings in the second-quarter 2007. As for Bombardier, Dan Solon, an independent airline analyst in Barcelona, told Bloomberg by telephone, “This is a massive blow to [the Canadian company]. “One of their important customers has displayed lack of confidence in their product, and that’s the worst thing that can happen to an aircraft maker.”

Landing-gear accidents move Scandinavian Airlines to ground planes from Canadian maker Bombardier

The Stockholm-based carrier SAS AB has stopped using its Dash 8 Series 400 planes from Bombardier Inc after three crash landings in six weeks. The Q400’s in the fleet, all 27 of them, were grounded as of 28 th October, Scandinavia’s biggest airline said in a statement. Bombardier, a Canadian conglomerate based in Montreal, Quebec, is a large manufacturer of regional and business aircraft and transportation equipment. As reported by Bloomberg News , SAS had once before taken the turboprops out of service over landing gear-related accidents, but had phased them back into the fleet.

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EuroWire – January 2008