Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Loss due to volcano clouds

CA Parth Verma (NYU Stern Alumni ) (90 Points)

21 April 2010

Hi,

As we all know that airlines were stuck in europe for past 6 days due to volcanic clouds.... and losses of airlines industries crosses almost the monthly GDP amount of United states of America... more than 4 lacs flights were cancalled

Now my doubt is that whether the airline co could file for insurance claim of loss of profit on te ground of natural calamity.... We have to make our suggestions on this which results healthy knowledge sharing and also we could utilize this platform Very well

So, ANYONE

Reply
Follow
Share

6 Replies

(Guest)

Its a well known fact that Airlines are suffering losses.. It depends upon Airlines how they will deal it.. Its not a matter of one day that Insurance Co's will satisfy such huge claims. Moreover, such claims will arise only when the Airlines have taken such policy or not.

Recently, seeing the huge losses British Airways has asked for a bailout package from the Govt. It depends upon them how such looses are to be curtailed.. You and me can only speculate solution but the real solution will only be possible on ground zero..

I would just say Airlines should take enough precautions to face such huge losses in future. They should create natural calamity reserve... Apart from this various stakeholders like Govt., shareholders etc.. should come forward to bring down huge losses as faced by major airlines recently..

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

CA Rajesh Pabari (Chartered Accountant - Advisory & Audit) (247 Points)
Replied 21 April 2010

If I give my personal opinion as a professional, I have the gut feeling that the same can be claimed from insurance company as loss of profit by the reason of natural calamity, if the agreement covers the same kind of clauses.

shakuntala chhangani (FCA Course co-ordinator WIRC coaching centre) (2525 Points)
Replied 26 April 2010

It don't agree with Mr. Rajesh as loss of profit by fire is common but i hv not yet heard of this kind of insurance cover. Now-a-days cancellation of flights due to natural calamities has become a routine matter. if the insurance cos. will start giving such claims, it will ruin them. It is just difference of opinion. Vice versa is also possible.

Regards, CA Shakuntala Chhangani

CA Tushar Lakhanpal (CA) (416 Points)
Replied 27 April 2010

i think Rajesh Sir may be rite.

coz he said if the agreement covers such clause...

and it is a very gud topic to discuss.

i think this is not a trading loss

the loss being suffered is due to fixed or indirect expenses, such as salaries, interest on loans, depreciations etc.

these airlines are saving there tax..

and rest of the loss can be amortised..

I THINK IF I WS AN OWNER OF THE AIRLINE

OR A CA WORKING THERE

MY COMPANY WUD HAVE SUFFERED LOSS FOR 2-3 DAYS

AND AFTER DAT ALL THE FLIGHTS COULD HAVE BEEN DIVERTED...

pls CORRECT ME IF I AM WRONG

KUSHAL AGRAWAL (CA Final Student) (128 Points)
Replied 24 May 2010

rajesh is correct ,

claims regarding any insurance poilcy depends on the clauses inside it , however where india is concerned , there is hardly such a big loss to india as compares to british airways or american airlines..

still i will maintain that if there's a cluase which covers natural calamity too , definiely claim is sustainable