Cathay may ground all flights - SCMP
This is indeed a worldwide catastrophe for air transport.
From the South China Morning Post:
Saturday, September 22, 2001
Cathay may ground all flights
VICTORIA BUTTON and AGENCIES
Cathay Pacific and other airlines around the world could be grounded next week when insurers plan to slash maximum payouts for acts of war, including terrorist attacks.
Cathay confirmed its third-party cover for such acts would be limited to US$50 million (HK$390 million) at 8am on Tuesday - from billions of US dollars now. Asked if it was possible for the airline to fly with that level of third-party cover, the director of corporate development, Tony Tyler, said: "No, it's not."
Reasons included the airline's obligation to other parties regarding minimum insurance and the personal liability for Cathay directors. Brokers were urgently searching for alternative insurance before the deadline, but all underwriters had imposed the cap and every airline was affected, Mr Tyler said.
Flights could be cancelled ahead of the deadline because no plane could be in the air when it passed, he added.
Airport Authority spokesman Chris Donnolley said Chek Lap Kok airport would lose its war-risk insurance from the deadline and was in discussions with the Government about how to keep operating.
All other airports worldwide were in the same position, he said.
Aviation analysts said airlines overseas were in talks with governments, which might be forced to act as insurers of last resort.
Mr Tyler said Cathay had not asked for aid from the Hong Kong Government, but later added: "At this stage I wouldn't rule anything out."
Getting passengers to sign away their rights would not help because the insurance being cut is third party - for example, to cover buildings and people on the ground if they are hit by a plane during a terror attack like the ones in the US. Insurers can cancel insurance for war risks with seven days' notice.
The head of Hong Kong research at Credit Suisse First Boston, Peter Hilton, said the owners of leased planes could stop them flying if they were insufficiently insured.
A Virgin Atlantic Airways spokesman said unless the British Government acted as an insurer of last resort "quite simply, we will not be able to fly legally".
German Economics Minister Werner Mueller was quoted as saying support for Lufthansa might be "conceivable", but added he was against such measures in principle.
The Australian Government said it might be willing to help Qantas on an "interim basis".
SG Securities analyst Robert Sassoon said he believed US airlines would get enough aid to avoid being grounded.