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Airlines seek protection from crippling litigation

Industry lobbyists for United and American go to Capitol Hill in hopes of limiting what they'll pay.

©New York Times

© St. Petersburg Times, published September 15, 2001

Industry lobbyists for United and American go to Capitol Hill in hopes of limiting what they'll pay.

As rescue workers continued to search for survivors in the smoking wreckage of the World Trade Center and the Pentagon, representatives of American Airlines and United Airlines began lobbying Congress to restrict lawsuits seeking compensation.

Lawyers who specialize in representing plaintiffs said the airlines were the most likely targets for negligence and wrongful death suits for victims on the ground and in the air. Potential payments could run into the hundreds of millions of dollars, the lawyers said.

In written and oral presentations Thursday to the Senate and House Commerce committees, representatives of the airlines asked for legislation that would limit their financial responsibility to only the passengers and crew of the three planes that crashed in New York and Washington and an aircraft that plowed into a field in Pennsylvania.

John Hotard, a spokesman for American Airlines, would not say if his airline was seeking protection. "I'm not denying it," he said. "I'm just declining to comment."

Jenna Ludgate, a spokeswoman for United Airlines, also declined comment. "At this point," she said, "our entire focus is on the families of the victims who were on our aircraft."

Airlines and insurers are already staggering from the attacks. Insurance executives estimate the costs for insurers at the World Trade Center could be $30-billion to $40-billion.

In Geneva, the International Air Transport Association said airlines had lost $10-billion in extra expenses and lost sales since commercial air traffic in the United States was grounded Tuesday.

"This is going to be a survival issue for several major carriers and certainly for some regionals," Bryan Bedford, the chief executive of Chautauqua Airlines, a regional airline based in Indianapolis, told Bloomberg News. One regional carrier, Midway Airlines, went out of business Thursday, saying that a drop in reservations and an increase in refund requests after the attacks had made it too hard to recover from a bankruptcy reorganization last month.

Sam Buttrick, an aviation industry analyst for UBS Warburg, said that higher security and fuel costs in response to the attacks would add to the industry's expenses.

Sen. Christopher "Kit" Bond, R-Mo., discussed the proposal on the Senate floor as a "means of keeping these airlines from being put out of business."

However, he said he was not yet offering legislation on the issue, which had been brought to his attention by American Airlines and United. Lawyers who specialize in liability cases said the families of the victims of the attacks would almost certainly receive much less in compensation through a federal payment program than in court.

"I winced when I heard about this today," said Leo Boyle, the president of the Association of Trial Lawyers of America. "No one should be initiating action -- before the victims are even identified, before the funerals -- to take away the existing and longstanding rights of the innocent victims and their families."

While airlines are insured, William Shernoff, a lawyer in Claremont, Calif., who specializes in litigation against insurance companies, said liability claims could easily exceed the coverage, forcing airlines to pay much of the cost of claims directly.

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