Asian governments bridge airline insurance gap

Asian governments bridge airline insurance gap
Reuters
Singapore

Asian governments stepped forward to bridge an insurance gap
for their airlines, joining their counterparts around the globe
scrambling to keep their carriers aloft ahead of sharply reduced
war risk protection.

The potential grounding of planes worldwide caps nearly two
weeks of turmoil triggered by the Sept.11 airborne assaults on
the United States that has cost billions of dollars in losses and
as many as 100,000 layoffs. Nearly 7,000 are feared dead in the
attacks.

Europe's provision of a month's worth of backup insurance
coverage to its carriers was small relief.

The region's biggest airline, British Airways, said on Sunday
it was considering a range of options to raise cash, including
the sale of property, if losses from the attacks in the United
States grew.

A spokesman said the sale and leaseback of its new Waterside
headquarters near Heathrow airport was one option for the
carrier, which is more dependent on North Atlantic business than
many rivals.

But he played down newspaper reports that it had already begun
to prepare such a move to boost cash reserves in the face of
falling passenger numbers.

The deal would be likely to bring in around 2 billion pounds
(US$2.9 billion).

Global insurers will cap third-party war and terrorism
insurance from midnight GMT on Monday at $50 million covering
death or injury on the ground for airlines considered to be "good
risks".

But that figure is considered inadequate since most airlines
have unlimited liability for such injuries and damage. Without
government backing, a number of carriers could have been grounded
on Tuesday.

Governments in Australia, New Zealand and South Korea have
offered to back up their airlines' insurance coverage. Hong Kong
is expected to do the same on Monday.

Chinese airlines said on Monday they expected government help
to manage higher insurance costs after the attacks on the United
States, but added that the impact on them was likely to be
limited.

Asia's largest capitalized airline, Singapore Airlines, among
the most cash-rich in the world, would not comment on whether it
is seeking government help.

"The matter is receiving attention. We expect our services to
operate as normal," a spokesman said.

In Hong Kong, shares of flag carrier Cathay Pacific Airways
slumped 0.79 percent at HK$6.25 by midday Monday after sinking 3
percent earlier on worries that its $1 billion insurance cover
would be inadequate and ground its planes.

On the other hand, South Korea's Korean Air Co Ltd, the
nation's largest carrier and second-ranked Asiana Airlines gained
nearly 3 percent and about 4 percent, respectively on Monday,
after the government agreed to back up their insurance needs.