Lufthansa Prepares For Compensation Claims

Lufthansa insurers have set aside $300 million to pay for Germanwings crash compensation claims, according to The Wall Street Journal. A spokesman for Germanwings’ parent company said Tuesday that Deutsche Lufthansa AG anticipated claims from a passenger liability policy and from insuring physical damage to the A320 aircraft. A Wednesday statement from Allianz SE, the carrier’s lead insurer, adds that some of the funds would cover investigation support. Lufthansa’s liability will partly depend on what they knew and when they knew it, as Bloomberg reports.

On Tuesday, Lufthansa admitted that Flight 4U 9525 co-pilot Andreas Lubitz, who is believed to have intentionally crashed the plane in the French alps, informed them that he had suffered “a serious depressive episode” in 2009. A note detailing Lubitz’s mental state was found in emails sent to his Arizona flight school, according to The Guardian. Lufthansa’s chief executive Carsten Spohr had previously said he did not know what had caused the gap in Lubitz’s training.

The $300 million set aside for the compensation claims is apparently twice what is normally allotted to an airplane crash, according to The Guardian, indicating that Lufthansa is likely anticipating a long process. Allianz's AGCS industrial insurance unit is the crash’s lead insurer, sharing the coverage with several other insurance companies. The sum to cover the totaled plane is reportedly in the region of $6.5 million, though this particular claim may end up being covered by a separate insurance consortium.

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Last week, Lufthansa announced that they would give €50,000 (or $53,800) per victim to relatives as an immediate payment. According to Bloomberg Business, legal experts have estimated that claims from families of the 149 people killed could possibly reach $350 million.

A torn-up sick note previously found at Lubitz’s home allegedly suggested he was hiding the extent of his illness from his employers, and Lufthansa has argued that strict German confidentiality laws meant they had little access to Lubitz’s medical history. But the company’s Tuesday statement acknowledged that Lufthansa was at least partially apprised of the situation early on. The statement read, in part:

In the interests of a fast and thorough investigation, Lufthansa has after further internal investigation, handed over additional documents to the Düsseldorf state prosecutor, particularly training documents and medical documents. … These include the co-pilot’s email correspondence with the flying school. In these, he had informed the school in 2009 of a "past serious depressive episode," in the context of a resumption of his training, including medical documents.
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Addison Schonland, a consultant at Baltimore’s AirInsight, told Bloomberg:

The issue now seems to be what did Lufthansa know, and when did it know it, and — if there was any concern about the pilot at the airline — what did they do to follow up on this? ... It seems appropriate the German laws should be reviewed. Whenever a person whose job performance could impact the safety of others is diagnosed by a doctor with such a condition, that information needs to be shared with authorities for public safety.

The airline could face potentially massive claims if they knew its co-pilot was suffering a medical condition that should have prevented him from flying, according to The Telegraph. But despite their Tuesday statement, there is no evidence as yet that Lufthansa had reason to believe that Lubitz was a danger in the cockpit. Also on Tuesday, the company announced they were canceling the airline’s 60th anniversary, "out of respect for the victims of the crash of flight 4U9525."

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