An attempt by pilots of Pan American World Airways, the once-dominant airline victimized by the 1988 mid-air bombing of Flight 103 over Lockerbie, Scotland, cannot recover money from a $1.5 billion fund created by Libya to compensate victims of the bombing, a Washington-based commission has ruled.
The pilots claimed that the bombing led directly to the demise of Pan Am, costing them their jobs, their health insurance and their pensions. Pan Am folded suddenly on Dec. 4, 1991, after an attempt to buy Northwest Airlines and a merger with Delta Air Lines both fell through.
Fifty Pan Am pilots and one flight attendant have been pursuing Libya in the courts since 1994, but it wasn’t until 2013 that they were allowed to file a claim with the Foreign Claims Settlement Commission, which reviews claims on the Libyan fund. The commission issued a preliminary ruling against the pilots in 2016, but they were granted a hearing in Washington in December 2016. In that hearing, a number of pilots, as well as former Pan Am executives and economic analysts, tried to make the case that the Dec. 21, 1988, bombing, which killed 270 people in the plane and on the ground in Scotland, set off the chain of events which led to the airline’s demise.
But commissioners Anuj C. Desai and Sylvia M. Becker stood behind their preliminary ruling, and their analysis of Pan Am’s decline, which they said was caused by many other factors, including a recession, airline deregulation, oil price spikes and the first Iraq War. The pilots “failed to prove that,” Desai and Becker wrote, “if not for Lockerbie, Pan Am would have remained in business. Pan Am’s 1991 liquidation was too remote, both factually and temporally, from the 1988 bombing; and far too much happened in the intervening three-year period to hold Libya liable for Pan Am’s liquidation.”
The ruling was issued Tuesday. There is no appeal from the Foreign Claims Settlement Commission, and the case is over.
Joanne Young, a lawyer for the pilots, was critical of the ruling. She said it stood “in stark contrast to the U.S. Congress appropriation of $5 billion to the U.S. airlines to avoid imminent bankruptcy following the 9/11 terrorist attacks, when they specifically cited the need to avoid another Lockerbie. It is also contrary to a finding by the U.S. Court of Appeals for the Second Circuit in 2001, which found that Pan Am ‘succumbed to two years of crushing financial pressures caused by the bombing’ over Lockerbie in filing for Chapter 7 bankruptcy.“
Young added, “A key argument for us was that, but for the financial losses from Lockerbie, Pan Am could have successfully merged with Northwest and remained in business. ” She noted that three former Pan Am executives testified to this. “The commissioners rejected this first-hand testimony and said there were no documents to prove that Lockerbie losses prevented the merger, or even if there had been a merger, that the combined airline would have survived,” Young said.
Bruce Abbott, the leader of the pilots’ case, said that after the December 2016 hearing at the federal courthouse in the District, “I came away with a very empty feeling.” He said the two commissioners “spent a whole day chopping away at things that were not of significance to the overall presentation.” Almost all of the pilots were military veterans, Abbott said, “and we had answered the call for our nation. We wanted a forum with competent triers of fact. I think we were shut out on that. I don’t think we got a fair hearing and I don’t think we got to the essence of the case.”
But the fact that the commission took more than a year to rule indicated to Abbott that Desai and Becker were figuring out how to award damages from the Libya fund. “So when they came through with this, it was startling,” Abbott said. “After 25 years of struggling to be heard, now we’ve gotten the results from what I consider a slapstick consideration, and there’s no appeal. I do have a great deal of frustration about it.”
In their ruling, the commissioners noted that “Pan Am struggled for years prior to the Lockerbie bombing.” A new CEO, Thomas Plaskett, took over, and the airline’s finances greatly improved in the third quarter of 1988. Economic experts provided forecasts of possible growth if not for the bombing, which the pilots said severely damaged passenger loads. But the commissioners ruled that “the law does not permit recovery based on projections unless there is a strong basis for believing that the projections are based on well-documented, consistent past realities.”
Young said that the commissioners “unfairly used essentially the criminal ‘beyond a reasonable doubt’ standard of proof to prove Lockerbie was the cause for Pan Am’s demise.” She said that was “contrary to their own rules which call for non-adversarial proceedings.”