Bombardier takes hit as U.S. authorities ground Learjets over safety concerns
 
ALLAN SWIFT 
Canadian Press


Wednesday, August 13, 2003

CREDIT: (CP)

MONTREAL (CP) - Bombardier Inc. has suffered more bad news as American regulators forced the temporary grounding of its popular Learjet 45 business jets for safety reasons.

Not only will the company's image be hurt by the headlines but it will have to foot some of the costs of clients whose planes have been grounded for at least a few weeks.

The Bombardier Aerospace division said Wednesday it expects the Learjet 45 business jets ordered grounded by the U.S. Federal Aviation Administration will be ready for inspection within 10 to 15 days, after it replaces a small faulty part in the tail section.

However, company spokesman David Franson of Wichita, where the eight-passenger jets are assembled, said it will take longer than that before the aircraft, owned mostly by corporations, are cleared for takeoff by the FAA.

Franson said there are 230 Learjet 45s in service throughout the world, of which 173 operate in the United States under the jurisdiction of the FAA.

"We're co-operating very closely with our supplier and the FAA to resolve the issue, and we're working around the clock to develop a response," Franson said. "We anticipate it will be 10 to 15 days to resolve."

When the aircraft will be cleared to resume service "is a function of how quickly the FAA certifies the part and we get them to the airplanes, but we hope that will be done very quickly."

FAA spokesman Paul Takemoto said the timing depends on how fast Bombardier Aerospace and its part supplier, MPC Products Corp. of Skokie, Ill., can design and manufacture a new screw and nut assembly for the horizontal stabilizer in the tail section.

"Obviously we would be moving as quickly as safely possible."

Bombardier (TSX:BBD.B) stock has already been battered by the downturn in the aviation industry, especially for business jets in which it is the market leader.

Bombardier's common shares were off two cents to $4.91 on the Toronto Stock Exchange Wednesday, supporting the view of one analyst who said that grounding the fleet will not have a big impact on the market.

"My anticipation is that other than the optics, the financial implications are not terribly material, looking at previous incidents of this nature," said the analyst, who asked not to be identified.

Under its contracts with buyers, Bombardier will have to provide partial compensation to customers who require alternate transportation while their jets are being refitted with the new component.

Bombardier owns 30 of the aircraft Learjet 45s in its Flexjet fractional ownership company.

The safety issue goes back to March when a Learjet 45 experienced a severe vibration and sudden nose-down pitch, and the crew had to make an emergency landing.

The FAA and company found a faulty screw and nut assembly in the control mechanism of the horizontal stabilizer.

The piece was replaced in all the aircraft, said Franson. But the FAA reported Tuesday, in ordering the grounding, the modified piece was also prone to fractures.