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National Air Cargo Sues U.S. in Afghan Military Crash

Oct. 2 (Bloomberg) -- National Air Cargo Group Inc. and its insurer sued the U.S. for breach of contract, saying the government failed to provide reimbursement of as much as $45 million for the crash of a Boeing 747-400 on a military mission in Afghanistan that killed seven crew members.

The Federal Aviation Administration improperly denied a claim to pay out on an insurance policy covering aircraft contractors working for the Defense Department in a hostile setting, according to a complaint filed yesterday by the air carrier and Commerce & Industry Insurance Co. in the U.S. Court of Federal Claims in Washington.

Commerce & Industry Insurance is a unit of American International Group Inc.

The policy requires that the FAA “shall make prompt payment in full of any claim covered by the policy after confirmation of loss,” the companies said in the complaint.

Laura Brown, a spokeswoman for the FAA, said in an e-mail that the agency doesn’t comment on pending litigation.

Commerce & Industry Insurance paid National Air Cargo and its lenders about $42 million to settle a claim for the loss of the plane, according to the suit.

The plane involved in the crash was working under a National Air Cargo contract with the U.S. Transportation Command.

Crash Video

The accident on April 29 near Bagram Airfield, the U.S. Air Force Base outside Bagram, Afghanistan, was captured on the dashboard-mounted camera of a nearby vehicle and posted on Google Inc.’s YouTube website.

In August, the estates of three pilots killed in the crash sued Boeing Co. in state court in Illinois, alleging negligient conversion of the plane from passenger to cargo use.

The cases are pending.

The Bagram crash was the fourth fatal accident involving a U.S.-registered cargo hauler since 2009, according to the National Transportation Safety Board. No U.S.-based passengers have had a fatal accident since Feb. 12, 2009, when 49 people died near Buffalo, New York, in the crash of a regional turboprop operated by Pinnacle Airlines Corp.’s former Colgan unit.

The case is National Air Cargo Group Inc. v. U.S., 13-cv-00764, U.S. Court of Federal Claims (Washington).

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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