Don't worry--it's not going to happen.

You've got that right. As the last twenty-five years of history has proven.

The Majors who hire regionals or third party companies are not nearly as accountable as you might think. In the case of 3407 and most contracts the legal responsibility is on the third party contractor. The lawyers havent gotten a chance to fight it but in every press release CAL has distanced themselves from Colgan, Pinnacle, and any regional by saying "we will try and assist their company in dealing with this issue." They have said that they are not liable for what their contractors do. This is the reason that Colgan's insurance will pay for most of the damages and CAL will get off without paying any major losses. They will try and sue CAL, airplane manufacturer, etc... but most cases will be dismissed and end up with the liability resting on Colgan.

If colgans insurance company goes bankrupt... then it will get interesting. Some states have laws that say the client whose case bankrupted the insurance company must "attempt" to make the debtors whole. The legal storm is just getting started in the 3407 case.


You missed what he was saying. He wants them to limit the number of certificates flying for a corportation. An example would be if Continental is the corporation. Only one certificate flying Continetal passengers with a gold globe on the tail. No regionals or subcontracting of flying is permissable. Codeshares would be a tricky thing to work out under this idea.

I looked into the size of the insurance company behind the 3407 lawsuits and found out there are two separate companies that are splitting the awards. So a bankruptcy is unlikely but the insurance companies can then sue whoever they like to recoup their losses.

"Insurance Day said the insured value of the aircraft was USD19 million and significant liability claims are expected from the crash. According to Insurance Day, Continental Airways is part of an airline insurance group placement that comes under the umbrella of Northwest. Northwest merged with Delta Airways in October 2008 and although Colgan was operating the flight for Continental, market sources said the hull and liability was covered under a Northwest-Delta plan. Sources added that Northwest’s lead insurer is Global Aerospace Underwriting Managers Ltd and Delta’s lead insurer is United States Aviation Insurance Group. Insurance Day said this has led to the insurers splitting the liability for the incident." RISK-i Update: Plane Crash, Buffalo, New York | GCCapitalIdeas.com

A bankruptcy is unlikely. The insurance industry is regulated, and you could not write a policy which you had no resources to pay on.

Anyone insuring an airline obviously knows that a hull-loss will cost $1B+. It is also normal to re-insure part of the policy to spread your exposure (and revenue) out among wholesale insurers.

An insurance BK is more likely in the event of a natural disaster, where multiple customers will have claims. I'm sure any airline insurer can pay on a single hull loss.

The insurance company will subrograte if they can, but I doubt there will be any easy targets.