mr Q
19th Mar 2008, 12:37
Crash victims’ kin to get $165 million
Biggest settlement in RP aviation history
Philippine Daily Inquirer
First Posted 01:35:00 03/19/2008
DALLAS, TEXAS—Insurance companies have agreed to pay $165 million to settle lawsuits brought by relatives of those killed in the crash of an Air Philippines Boeing 737 on Samal Island in 2000, said to be the biggest settlement in Philippine aviation history.
The families of about 100 of the 131 people killed in the crash sued the United States companies that owned the plane and leased it to Air Philippines, accusing them of providing a worn-out plane in need of constant maintenance that the airline was incapable or unwilling to do.
After legal fees of about one-third of the award, the families will get on average more than $1 million each, according to Donald J. Nolan, whose Chicago law firm took the lead in the case.
The judge must still approve disbursements from a trust fund to individual families, which will receive varying awards.
The lawyer said Air Philippines, owned by beer and tobacco magnate Lucio Tan, offered the families about $20,000 each.
For Patricio Piñol, who lost his wife and two children in the crash, no amount of money can heal his pain and that of the other families of those who died in the crash.
“We may have won the case [and] ended the legal battle and opened the possibility of starting a new life again. But the truth remains, that people lost people in that incident … many died and many mourned and until now, a lot [of us] have still not recovered,” he said.
Piñol said the cash settlement brought “a feeling which is very different from winning in a cockfight or hitting a lotto jackpot.”
He finds it difficult to talk about the case “because every time I think about this, come the inevitable reliving of the painful experience of losing people whom you dearly love … I have not bounced back from the tragedy.”
While on a commuter flight from Manila to Davao on April 19, 2000, Air Philippines Flight 541 crashed into the side of a hill on Samal Island at about 7 a.m., just a few kilometers from the Davao International Airport, as the pilot made a second attempt to land on the runway. All 124 passengers and seven crew members were killed.
Witnesses saw the Boeing 737-200 to have been on fire before it crashed into the coconut plantation on Barangay San Isidro in Babak town.
It was said to be the country’s worst air tragedy.
An earlier report said pilot error caused the crash, but this was rejected by relatives of the fatalities who filed the case against the US companies in a state court in Chicago. It was scheduled for trial in September but was settled in late February by Air Philippines’ insurers, who negotiated on behalf of the plane’s suppliers. Neither the US companies, Air Philippines nor the insurers admitted responsibility.
Nolan said the amount of the settlement will improve safety in developing countries, where carriers often buy aging aircraft no longer wanted by US airlines.
The Air Philippines Boeing 737 that crashed was made in 1978 and operated for 20 years by Southwest Airlines Co., which was recently slapped with a $10.2-million fine by US regulators for flying 737s without making required inspections for cracks in the fuselages.
Cracks in 737’s fuselage
The lawyers said the plane had cracks and a faulty altimeter when it was delivered to Air Philippines, but they did not sue Southwest because it had no role in selling the jet to the foreign carrier.
The plane was purchased in 1998 by AAR Corp., an Illinois-based company that sells aircraft parts and leases planes to some of the world’s largest carriers. AAR leased the plane to Air Philippines and then sold the plane and the lease to Fleet Business Credit Corp., which is now a subsidiary of Bank of America Corp.
AAR “did some cosmetic work, didn’t do a [heavy-maintenance] ‘D’ check ... and shipped it out to the Philippines,” said Gerald C. Sterns, an aviation lawyer in Oakland, Calif., who also represented some of the families.
“They are in the business of providing cheap aircraft to lease,” said Sterns.
In 1999, AAR obtained an airworthiness certificate from the US Federal Aviation Administration judging the planes sound enough to export to the Philippines.
No one knows for sure
A commission appointed by the then President Joseph Estrada blamed the crash on pilot error and found no evidence of mechanical failure. But lawyers for the families said no one will ever know what caused the crash because parts of the mangled plane were dumped in a pit and buried in concrete before they could be examined by independent experts.
David P. Storch, the chairman and chief executive of AAR, said the burial of the plane probably played a role in the insurance companies’ decision to settle.
“I believe they felt they had a problem with what the Philippine authorities had done with the aircraft,” he said.
But Storch defended his company’s overhaul of the plane and the lease to Air Philippines.
“We delivered a very good aircraft in good working condition to a very good airline,” he said. “Unfortunately, this aircraft had an accident because the pilot got in some clouds and got disoriented.”
Gary W. Westerberg, a lawyer for the London insurers, said his clients settled because of court rulings that AAR and Fleet controlled documents, witnesses and disposal of the wreckage. The companies also failed in an effort to try the lawsuits in the Philippines.
Higher insurance premiums
Nolan and Sterns said companies such as AAR that buy planes and lease them to foreign airlines will face higher insurance premiums as a result of the settlement.
But Storch, the AAR chief executive, said the settlement won’t have any financial impact on his company, which he said was indemnified for its costs by Air Philippines’ insurers.
He also said the case will not deter AAR from leasing planes to customers that include British Airways, UAL Corp.’s United Airlines and Continental Airlines Inc.
“We have an impeccable safety record,” Storch said.
Moving on
Piñol, an older brother of North Cotabato Vice Gov. Emmanuel Piñol, said he and other families have not been formally notified of the settlement.
He said the last time they heard from lawyer Nolan was in November, when the latter came to meet with them.
He said it was good news as it has put an end to the case and would enable the families of the victims to move on with their lives. With Jeffrey M. Tupas, Inquirer Mindanao
Copyright 2008 Philippine Daily Inquirer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Biggest settlement in RP aviation history
Philippine Daily Inquirer
First Posted 01:35:00 03/19/2008
DALLAS, TEXAS—Insurance companies have agreed to pay $165 million to settle lawsuits brought by relatives of those killed in the crash of an Air Philippines Boeing 737 on Samal Island in 2000, said to be the biggest settlement in Philippine aviation history.
The families of about 100 of the 131 people killed in the crash sued the United States companies that owned the plane and leased it to Air Philippines, accusing them of providing a worn-out plane in need of constant maintenance that the airline was incapable or unwilling to do.
After legal fees of about one-third of the award, the families will get on average more than $1 million each, according to Donald J. Nolan, whose Chicago law firm took the lead in the case.
The judge must still approve disbursements from a trust fund to individual families, which will receive varying awards.
The lawyer said Air Philippines, owned by beer and tobacco magnate Lucio Tan, offered the families about $20,000 each.
For Patricio Piñol, who lost his wife and two children in the crash, no amount of money can heal his pain and that of the other families of those who died in the crash.
“We may have won the case [and] ended the legal battle and opened the possibility of starting a new life again. But the truth remains, that people lost people in that incident … many died and many mourned and until now, a lot [of us] have still not recovered,” he said.
Piñol said the cash settlement brought “a feeling which is very different from winning in a cockfight or hitting a lotto jackpot.”
He finds it difficult to talk about the case “because every time I think about this, come the inevitable reliving of the painful experience of losing people whom you dearly love … I have not bounced back from the tragedy.”
While on a commuter flight from Manila to Davao on April 19, 2000, Air Philippines Flight 541 crashed into the side of a hill on Samal Island at about 7 a.m., just a few kilometers from the Davao International Airport, as the pilot made a second attempt to land on the runway. All 124 passengers and seven crew members were killed.
Witnesses saw the Boeing 737-200 to have been on fire before it crashed into the coconut plantation on Barangay San Isidro in Babak town.
It was said to be the country’s worst air tragedy.
An earlier report said pilot error caused the crash, but this was rejected by relatives of the fatalities who filed the case against the US companies in a state court in Chicago. It was scheduled for trial in September but was settled in late February by Air Philippines’ insurers, who negotiated on behalf of the plane’s suppliers. Neither the US companies, Air Philippines nor the insurers admitted responsibility.
Nolan said the amount of the settlement will improve safety in developing countries, where carriers often buy aging aircraft no longer wanted by US airlines.
The Air Philippines Boeing 737 that crashed was made in 1978 and operated for 20 years by Southwest Airlines Co., which was recently slapped with a $10.2-million fine by US regulators for flying 737s without making required inspections for cracks in the fuselages.
Cracks in 737’s fuselage
The lawyers said the plane had cracks and a faulty altimeter when it was delivered to Air Philippines, but they did not sue Southwest because it had no role in selling the jet to the foreign carrier.
The plane was purchased in 1998 by AAR Corp., an Illinois-based company that sells aircraft parts and leases planes to some of the world’s largest carriers. AAR leased the plane to Air Philippines and then sold the plane and the lease to Fleet Business Credit Corp., which is now a subsidiary of Bank of America Corp.
AAR “did some cosmetic work, didn’t do a [heavy-maintenance] ‘D’ check ... and shipped it out to the Philippines,” said Gerald C. Sterns, an aviation lawyer in Oakland, Calif., who also represented some of the families.
“They are in the business of providing cheap aircraft to lease,” said Sterns.
In 1999, AAR obtained an airworthiness certificate from the US Federal Aviation Administration judging the planes sound enough to export to the Philippines.
No one knows for sure
A commission appointed by the then President Joseph Estrada blamed the crash on pilot error and found no evidence of mechanical failure. But lawyers for the families said no one will ever know what caused the crash because parts of the mangled plane were dumped in a pit and buried in concrete before they could be examined by independent experts.
David P. Storch, the chairman and chief executive of AAR, said the burial of the plane probably played a role in the insurance companies’ decision to settle.
“I believe they felt they had a problem with what the Philippine authorities had done with the aircraft,” he said.
But Storch defended his company’s overhaul of the plane and the lease to Air Philippines.
“We delivered a very good aircraft in good working condition to a very good airline,” he said. “Unfortunately, this aircraft had an accident because the pilot got in some clouds and got disoriented.”
Gary W. Westerberg, a lawyer for the London insurers, said his clients settled because of court rulings that AAR and Fleet controlled documents, witnesses and disposal of the wreckage. The companies also failed in an effort to try the lawsuits in the Philippines.
Higher insurance premiums
Nolan and Sterns said companies such as AAR that buy planes and lease them to foreign airlines will face higher insurance premiums as a result of the settlement.
But Storch, the AAR chief executive, said the settlement won’t have any financial impact on his company, which he said was indemnified for its costs by Air Philippines’ insurers.
He also said the case will not deter AAR from leasing planes to customers that include British Airways, UAL Corp.’s United Airlines and Continental Airlines Inc.
“We have an impeccable safety record,” Storch said.
Moving on
Piñol, an older brother of North Cotabato Vice Gov. Emmanuel Piñol, said he and other families have not been formally notified of the settlement.
He said the last time they heard from lawyer Nolan was in November, when the latter came to meet with them.
He said it was good news as it has put an end to the case and would enable the families of the victims to move on with their lives. With Jeffrey M. Tupas, Inquirer Mindanao
Copyright 2008 Philippine Daily Inquirer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.