War Risk Insurance Extended in 2014 for Airlines by Obama

U.S. government insurance that guarantees airlines are covered against terrorism and war was extended for four carriers, including Virgin America Inc., that otherwise would have lost coverage at the end of the year.

President Barack Obama extended the insurance for as long as one year while on vacation in Hawaii, according to the order distributed by e-mail. Congress must also approve the extension, according to the order. The companies covered also include Oracle Corp. founder Larry Ellison’s Island Air, an intra-Hawaii carrier based in Honolulu.

The U.S. stepped in to guarantee that airlines could receive insurance after the Sept. 11, 2001, terrorist hijackings. Most carriers remain covered under a law passed in 2002 and extended by Congress in a measure funding the Federal Aviation Administration into 2014.

Virgin America, Island Air and two others weren’t covered by the extension, so Obama had to issue his order covering them, according to an FAA statement.

“We have participated in this approval process every time our insurance has renewed since our launch in 2007,” Abby Lunardini, a spokeswoman for Burlingame, California-based Virgin America, said in an e-mailed statement.

The other carriers are Cape Air, based in Hyannis, Massachusetts, and Seaborne Airlines, which operates flights for American Airlines Group Inc. in the Caribbean and the Virgin Islands.

Seaborne is based in St. Croix in the U.S. Virgin Islands.

Obama’s administration has proposed phasing out the government-guaranteed program for airline insurance, along with other similar programs, starting in 2015, according to the Office of Management and Budget.

To contact the reporters on this story: Alan Levin in Washington at alevin24@bloomberg.net; Jodi Schneider in Washington at jschneider50@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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