AIG announced that they're not going to pay American Airlines tab for issuing immediate benefits in claims based on the Hudson River water landing of American Airlines Flight 1549 piloted by the heralded Sully Sullenberger. They argue that thier insurance clause is based on negligence of the pilot, aircraft or airline and none exists.
American Airlines immediately recognized moral obligation to compensate each of it's 155 passengers for their ordeal to the tune of $5000 per passenger and they are now offering an additional $5000 to each passenger in exchange for a waiver of further liability.
AIG is refusing to back these payments in an subsequent American Airlines claim and won't agree to cover the cost of passenger injury claims. They have agreed to cover up to 3 visits of crisis counseling but after that it's the passengers responsibility.
Their short sightedness explains why they needed the bailout money. Their decision making is ignorant. The worst kind of insurance claim is just looming around AIG. All 155 passengers passengers survived. That's 155 witnesses to this event and 155 attorneys and 155 potential claims. It's the perfect storm waiting to happen and it won't be long before at least one lawyer proves negligence and triggers their policy costing them millions more.
Could they be this foolish?
Well let's look at the management. AIG had no problem funding a swanky $440,000 business retreat for their top execs. Then they turned around and award themselves 165 million in executive bonuses with taxpayer money!
Now they are balking at settlement less than $2,000,000? This is one of those cases where the more AIG keeps tight fisted, the more it's going to cost them in the end.
I think the only way their going to save money and recover public confidence is to demonstrate good judgment. They should pay this claim and cut their losses by showing the American tax payer that they value saved lives as much as lost lives.
Half-witted of them - the negative PR will be much more than paying out.
Trust me, those at the head of corporations ARE often that ignorant. And absolutely, showing good judgment would be the best case scenario. From what I have witnessed in my career, it is often rarely the case. Business is not about fair play, or even the company's enlightened self interest, or making good decisions. It is about greed and egos.
The people at the top are often not as smart (and much more ego driven) than those below them. It isn't about the company as a whole, ie. And in a role as an adviser, etc., in some capacity as to what their actions should be, petty politics--with your livelihood sometimes hanging on the line often plays a part.
Gone are the days of Carnegie and others who saw things on a grander scale. Just a fact. Buffet is about as close as we get, and of course his primary tenet is a company is only as good as its management's ethics. What companies like AIG don't realize is that with ethical practices, they will find themselves richer in the long run--but it isn't about the long run. It's about cut, grab and run away with million dollar shower curtains and stupid luxury animalistic comforts like these 'business retreats.' Yes, this is who we have at the top. So called 'leaders.'
Aren't they government owned already? What else would you expect from the government?
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