FOR IMMEDIATE RELEASE January 29, 2003
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|To:||All airlines operating (and all operating lessors leasing) aircraft supported by the Export-Import Bank of the United States (each an Airline)|
|From:||Alice McNutt Miller |
Vice President - Asset Management Division
Export-Import Bank of the United States (Ex-Im Bank)
By notices dated September 24, 2001 (the 1st Notice), October 1, 2001 (the 2nd Notice), October 11, 2001 (the 3rd Notice), November 30, 2001 (the 4th Notice), March 28, 2002 (the 5th Notice), and June 27, 2002 (the 6th Notice) and September 26, 2002 (the 7th Notice) Ex-Im Bank informed each Airline that, subject to the terms and conditions set forth therein, Ex-Im Bank would not require compliance with specified terms of the documentation governing Ex-Im Bank supported aircraft transactions (the Governing Documents). These terms were with respect to certain minimum amounts of liability insurance for third party claims of people and property on the ground for personal injury and property damage arising from war and allied perils (Third Party Liability War Risk Insurance). Ex-Im Bank further advised that it would not exercise its rights under the Governing Documents with respect thereto. These notices were effective through October 1, 2001, October 11, 2001, November 30, 2001, March 31, 2002, June 30, 2002, and September 30, 2002 and January 31, 2003, respectively.
In the 2nd Notice, Ex-Im Bank requested each Airline to respond to a detailed questionnaire. Ex-Im Bank analyzed the information provided and continues to monitor developments in the international aviation insurance market and foreign government actions in response thereto. During the period covered by the 3rd Notice, Ex-Im Bank conferred with other interested parties (including representatives of other export credit agencies, commercial banks, aircraft operating lessors, insurance brokers, airlines and aircraft manufacturers). During the period covered by the 4th Notice, Ex-Im Bank continued to confer with other interested parties and closely followed the progress of the International Civil Aviation Organization (ICAO) Special War Risk Group toward formulating a proposed international solution to the war risk insurance problems confronting the international airline industry. During the period covered by the 5th Notice, Ex-Im Bank continued to monitor the developments in the ICAO Special War Risk Group, as well as the developments in the private sector insurance markets, including the position of various governments with respect to providing government guarantees or indemnities in lieu of commercial insurance. In the 6th Notice, Ex-Im Bank requested each Airline to respond to a questionnaire concerning the status of its insurance with respect to coverage against the risk set forth in Section 1(e) of LSW 555B (Confiscation by Government of Registry). During the period covered by the 6th Notice, Ex-Im Bank analyzed the information provided by each airline with respect to its insurance coverage against Confiscation by Government of Registry and continued to pay close attention to developments regarding the supplemental coverage for third party liability war risk provided by some governments for amounts in excess of the limit of coverage for such risk available under AVN 52D.
During the period covered by the 7th Notice, Ex-Im Bank continued to monitor market developments with respect to cost or availability of coverage against Confiscation by Government of Registry and the fleet aggregate limits for hull war risk and allied perils insurance under LSW 555B (Hull War Risk and Allied Perils Insurance). Ex-Im Bank is aware that many underwriters are specifically excluding coverage against Confiscation by Government of Registry upon renewal of Hull War Risk and Allied Perils Insurance policies and that fleet aggregate limits have been reduced under Hull War Risk and Allied Perils Insurance policies.
Ex-Im Bank continues to work with other U.S. Government agencies, international aviation associations such as the International Civil Aviation Organization, the International Air Transport Association and the European export credit agencies on a longer term, uniform approach to solving the problems presented by these issues. Ex-Im Bank continues to be hopeful that a truly international solution will be available within a reasonable period of time. Accordingly, subject to the terms and conditions described below, Ex-Im Bank will not exercise its rights under the Governing Documents with respect to: (a) Third Party Liability War Risk Insurance and (b) insurance coverage against Confiscation by Government of Registry through 23:59 EST on July 31, 2003. Additionally, until further notice, Ex-Im Bank will no longer require Airlines to maintain coverage for Confiscation by Government of Registry.
Ex-Im Bank notes (a) that Third Party Liability War Risk Insurance in the required amounts continues to be available from the commercial aviation insurance industry and (b) that a number of governments have continued to provide supplemental coverage either through purchase or through indemnity. Ex-Im Bank expects each Airline to avail itself of one or both of these options during the period this notice is in effect.
Each recipient of this notice (the 8th Notice) is requested to review it carefully and comply with the provisions set forth below. The principal changes appear in paragraphs 3 and 5.
- Except as provided in paragraph 3 hereof, this 8th Notice and all of its provisions expire automatically and without notice at 23:59 EDT on July 31, 2003.
- To the extent the Airline does not maintain, or cause to be maintained, Third Party Liability War Risk Insurance in the amounts required by the Governing Documents as a result of the changes in the international insurance markets due to the incidents of September 11, 2001, Ex-Im Bank will not require compliance with such requirements and will not exercise its rights under the Governing Documents with respect thereto for a period commencing 00:00 EST February 1, 2003, and ending 23:59 EDT July 31, 2003. This decision by Ex-Im Bank to forbear from the exercise of its rights under the Governing Documents is further subject to the terms and conditions stated herein and may be revoked for any reason or no reason upon 24 hours' prior written notice to the Airline from Ex-Im Bank. The provisions of this Notice do not apply to insurance coverage against the risks covered in Sections 1(a), 1(b), 1(c), 1(d) and 1(f) of LSW 555B, Hull War Risk and Allied Perils Insurance.
- Effective February 1, 2003, Ex-Im Bank will no longer require each Airline to maintain coverage for Confiscation by Government of Registry (Section 1(e) of LSW 555B, Hull War Risk and Allied Perils Insurance). In those cases where an Airline has obtained this coverage, Ex-Im Bank will require that it or its Security Trustee be named as sole loss payee (or equivalent). Ex-Im Bank expressly reserves the right to require each Airline to obtain this coverage in the future. This decision by Ex-Im Bank not to require coverage for Confiscation by Government of Registry is further subject to the terms and conditions stated herein and may be revoked for any reason or no reason upon 24 hours prior written notice to the Airline from Ex-Im Bank.
- Each Airline is required to advise Ex-Im Bank in writing per the instructions set forth below of any changes occurring subsequent to the submission of such Airline's responses to the questionnaires included with the 2nd, 6th and 7th Notices with respect to: (a) the availability or amounts of commercial Third Party Liability War Risk Insurance carried, (b) the availability or amounts of Hull War Risk and Allied Perils Insurance carried (including, without limitation, the fleet aggregate limit for Hull War Risk and Allied Perils Insurance and the basis for such limit), and (c) with respect to clauses (a) and (b), (i) any contingent or stand-by coverage offered to the Airline by any governmental authority and (ii) what specific actions the Airline is taking in response to any changes.
- Each Airline is further required to instruct its insurance broker to: (a) advise Ex-Im Bank in writing of the identity of and percentages covered by each reinsurer providing hull, hull war risk and third party liability reinsurance coverage and (b) certify that the reinsurance policies are not, directly or indirectly, being provided by or on behalf of persons or entities that are (i) nationals of, (ii) located in or (iii) owned by governmental authorities of any country which has a notation of footnote 7 on Ex-Im Bank's Country Limitation Schedule. This information is available on Ex-Im Bank's website (www.exim.gov) and changes from time to time. The countries currently bearing footnote 7 are: Cambodia, Cuba, Iran, Iraq, Laos, Libya, Myanmar, North Korea, Sudan and Syria. The broker is to be further instructed to advise Ex-Im Bank on an ongoing basis of any changes in the identity of or percentages covered. Ex-Im Bank reserves the right to require such Airline to obtain additional or different commercial insurance coverage as the specific circumstances may require.
- In the event that an Airline gives notice of any change pursuant to paragraph 4 above, and in particular with respect to changes in coverage referenced in paragraph 4(c)(i) and any proposed actions referenced in paragraphs 4(c)(ii), Ex-Im Bank reserves the right to require such Airline to obtain additional commercial insurance coverage as the specific circumstances may require.
- Except as expressly set forth herein, this 8th Notice does not modify or waive any provision of any Governing Document, all of which remain in full force and effect, and does not modify or waive any right or remedy Ex-Im Bank may have under the Governing Documents, all of which are hereby expressly reserved.
- This 8th Notice affects only Ex-Im Bank's rights under the Governing Documents. Ex-Im Bank notes that other parties to the Governing Documents may have independent rights with respect to the Airline under the Governing Documents or other agreements and this 8th Notice is not intended, and does not, affect any such rights. Ex-Im Bank also notes that the Airline must continue to comply with all applicable laws and regulations, including any minimum insurance coverage required by relevant jurisdictions.
- This 8th Notice is not intended, nor shall it be construed, as advice or comment on any aspect of the Airline's business or operations, including any decision to operate or not operate any aircraft at any time or on any route.
Questions regarding this 8th Notice and the information required under paragraphs 4 and 5 above should be addressed: (a) by e-mail, to Louis E. Emery, Esq. (firstname.lastname@example.org) Douglas O. Adler, Esq. (email@example.com ) and Mr. Robert Lewandowski (firstname.lastname@example.org), and (b) by fax to the attention of Messrs. Emery and Adler (202-565-3462) and Mr. Lewandowski at (202-565-3625).