BRUSSELS (AP) — In the wake of suicide hijackings in the United States, airlines around the world are facing an insurance crisis that could force the grounding of some flights next week, industry officials said Friday. "The airlines have been given an ultimatum and are faced with massively increased charges," said David Henderson of the Association of European Airlines. "It's a worldwide issue." After last week's attacks, insurance companies, facing billions in potential claims, activated a seven-day trigger that cancels existing war liability policies for airlines, officials in both industries said. Airlines around the world have until next Tuesday to sign new policies on terms that limit insurer liability for collateral damage on the ground and increase premiums considerably. In the case of Belgium's Sabena, the limits for liability drop from a total $2 billion (U.S.) to only $50 million (U.S.), said spokesman Wilfried Remans.

That is far below the amount required in the leasing contracts for 90 per cent of Sabena's fleet, meaning Sabena would not be able to fly those planes after Tuesday, he said. On top of that, premiums are being raised, he said, with the war coverage for passengers alone going up $13.75 (U.S.) million a year. "The consequences are enormous," he said. Sabena management has been meeting with the Belgian government, which owns 50.5 per cent of the airline, to try to find a solution. Remans said the airline, already in a financially precarious position, had not yet decided whether to cancel flights, but added: "We have not excluded anything." A spokesman for Air Canada wasn't immediately available to comment on the insurance issue. Canada's biggest airline has asked for more than $3 billion in federal aid as a result of the travel downturn following the terrorist attacks. British carriers are in urgent talks with the British government, airlines said. "Talks are well-advanced and we are confident that a solution will shortly become available," British Airways general counsel Robert Webb said on behalf of BA and "many other" British airlines. Virgin Atlantic Airways spokesman Paul Moore said almost all of its 31 aircraft are leased. Government rules require $200 million (U.S.) in coverage per aircraft, and the leases generally require $750 million, but insurers are only able to offer $50 million (U.S.). "Unless they (the government) act as insurer of last resort, quite simply we will not be able to fly legally after Monday midnight," he said. Virgin Atlantic said Monday it would cut about 1,200 jobs and reduce schedules by 20 per cent.

http://www.thestar.com/NASApp/cs/ContentServer?GXHC_gx_session_id_=649515af7a7803ec&pagename=thestar/Layout/Article_Type1&c=Article&cid=1001066816110&call_page=TS_News&call_pageid=968332188492&call_pagepath=News/News Likely outcome.. governments will further limit airline liability..Fly at your own risk..

-- Anonymous, September 21, 2001

Answers

I recall that some airlines cited y2k insurance issues as a reason for shutting down over rollover. I think that was considered a Good Thing at the time. Gave them an excuse.

-- Anonymous, September 21, 2001