Insurance companies have agreed to pay $165 million to settle lawsuits brought by relatives of those killed in a 2000 plane crash in the Philippines. The families of about 100 of the 131 people killed in the crash sued the American companies that owned the plane and leased it to Air Philippines. The plaintiffs alleged that the companies provided a worn-out plane in need of constant maintenance that the airline was incapable or unwilling to do. The case, filed in state court in Chicago, 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.

There is clearly a need to improve safety in developing countries, where carriers often buy aging aircraft no longer wanted by U.S. airlines. In this case, the families will get on average more than $1 million each from the settlement. The judge must still approve disbursements from a trust fund to individual families, which will receive varying awards. The Air Philippines Boeing 737 that crashed was made in 1978 and operated for 20 years by Southwest Airlines Co.

It was alleged that the plane had cracks and a faulty altimeter when it was delivered to Air Philippines. Southwest wasn’t sued 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. In 1999, AAR obtained an airworthiness certificate from the Federal Aviation Administration judging the plane sound enough to export to that country.

While on a commuter flight from Manila to Davao in the Philippines in April 2000, the plane crashed into the side of a hill as the pilot made a second attempt to land on the runway. All 124 passengers and seven crew members were killed. A commission appointed by the president of the Philippines 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. Donald J. Nolan, a Chicago lawyer, and Gerald C. Sterns, a California lawyer, represented the families in the lawsuit.

Source: Insurance Journal

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