This is from the BBC
Friday, 21 September, 2001, 07:06 GMT 08:06 UK
Airlines 'threaten to stop flying'
EU finance ministers will discuss subsidies for airlines
Leading UK airlines have reportedly warned Trade Secretary Stephen Byers they might be forced to ground their planes from Tuesday unless the government insures them for terrorist acts.
Airlines around the world said on Thursday that underwriters had given notice they would cancel cover for war liabilities from midnight Monday, the Financial Times newspaper said.
Ten airlines including British Airways, Virgin Atlantic warned in a letter to Mr Byers that reductions in insurance cover for third party injury could put them in breach of contracts with the companies from which they lease aircraft and stop them flying, it said.
The government is to hold crisis talks with airline and insurance company bosses on Friday.
It is also examining emergency measures, including a scheme that would see the government underwriting commercial airlines' insurance, to keep the airlines flying.
The news comes as the US Congress and the White House agreed a $15bn plan to bail out the airline industry in the aftermath of last week's terrorist attacks.
Emergency measures
The letter says insurers are offering third party insurance of just £34m, much less than the £515m typically demanded by aircraft leasing companies.
A spokeswoman for British Airways told BBC News Online: "We are talking to the insurance companies about the situation. We are aware of their concerns."
She refused to comment on the FT report that the airlines had threatened to stop flying.
Meanwhile, European Union finance ministers will hold an informal meeting on Friday to discuss the economic impact of the attacks on the US and the possible easing of rules on state subsidies for airlines.
In the US, President Bush has asked Congress to amend legislation on war risk insurance provided by the Department of Transport to cover domestic US flights, eliminating the risk of carriers being unable to find insurance and offsetting rate increases, his spokesman Ari Fleischer said on Thursday.
Security improvements
Insurance experts say that in some instances premiums have increased tenfold since last week's attack.
David Worsfold, editor of insurance industry journal Post, said cover for planes was still available but airlines were having difficulty securing liability insurance, to cover the risk of terrorist attack or war.
He said airlines could normally expect up to £1.5bn of liability, but this had now been reduced to £50m at best, which was not enough.
But, he added, insurance companies wanted to see a dramatic improvement in airline security before premiums would come down.
"Their (the airlines) attempts to improve security at airports could be described as inconsistent and haphazard at best," he told BBC Breakfast.
"You cannot expect insurance companies to be sympathetic to the airlines, if they cannot get that right," he added.
Overstating the case
Some industry figures believe the airlines are overstating the case for state aid.
Michael O'Leary, chief executive of low cost airline Ryanair told BBC Radio 4's Today programme: "There were going to be large job losses on the way already.
"Companies were losing money before last week.
"Last week's events have brought it forward."
Mr O'Leary said that rather than "begging" money from European governments, airlines should slash fares.
"We continue to take the same number of bookings per week as we did before the tragic events in the US last week," he added.
US rescue package
The US government's airline rescue package includes $5bn in direct grants to the airlines.
The US government will also provide the airlines with loan guarantees of $10bn.
US Transport Minister Norman Mineta said there was also an agreement that the federal government would spend $3bn to upgrade security in airplanes and airports.
That sum would come out of the $40bn in emergency spending that Congress approved last week for recovery and victim relief efforts.
It is not looking good out there...
VTOL