WOOD DALE, Ill., March 13 /PRNewswire-FirstCall/ -- AAR CORP. (NYSE: AIR)
responding to inquiries today stated that insurers for Air Philippines have
entered into a final settlement with all eligible plaintiffs in a lawsuit
regarding an April 2000 accident involving an Air Philippines Boeing 737-200
aircraft in Davao, Mindanao, Republic of the Philippines. AAR Parts Trading,
Inc., an AAR CORP. operating subsidiary, was one of the named defendants in
the lawsuit.
The settlement was negotiated and entered into by Air Philippines'
insurers who will pay the agreed settlement amount, as well as all defense and
court costs of the lawsuit, pursuant to contractual indemnification
obligations. The AAR subsidiary was fully indemnified by Air Philippines and
its insurers, and the settlement will have no financial impact on AAR or its
insurers. The settlement involved no admission of liability by any party in
the lawsuit.
The aircraft, operated by Air Philippines under a long-term finance lease,
was owned by another named defendant at the time of the accident in
April 2000. AAR's subsidiary purchased the aircraft, which was maintained and
operated by a U.S. airline, in November 1998. The subsidiary subsequently
leased the aircraft to Air Philippines and sold the aircraft and lease to an
unrelated third party U.S. financial institution, which became owner/lessor of
the aircraft days after delivery of the aircraft to Air Philippines in early
1999.
At the time of delivery to Air Philippines, the aircraft was certified
airworthy and complied with all applicable U.S. government and Philippine
maintenance, airworthiness and export requirements, and was in safe operating
condition. Immediately prior to delivery, the aircraft was inspected and had
had maintenance performed including a "C" maintenance check, and an Export
Certificate of Airworthiness was issued by a Designated Airworthiness
Representative of the Federal Aviation Administration. The Philippine
Department of Transportation, Air Transportation Office also issued a
Certificate of Airworthiness for the aircraft upon its import into the
Philippines. At the time the aircraft was leased to Air Philippines, and at
all times prior to the accident, the aircraft was equipped with a Mark VII
"classic" Ground Proximity Warning System ("GPWS"). This GPWS complied with
all applicable U.S. Federal Aviation Regulations as well as Philippines
regulations in effect at the time of the lease and delivery of the aircraft as
well as at the time of the accident.
According to the report of the Independent Investigation Committee
appointed by the president of the Philippines to investigate the April 2000
accident, the accident was caused by the pilots' loss of situational awareness
while on approach to Davao, which led to the aircraft colliding with terrain
approximately three miles northeast of the airfield. The Independent
Investigation Committee specifically found that there was no evidence of any
structural or mechanical defect that may have contributed to the cause of the
accident.
This press release contains certain statements relating to future results,
which are forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
are based on beliefs of Company management, as well as assumptions and
estimates based on information currently available to the Company, and are
subject to certain risks and uncertainties that could cause actual results to
differ materially from historical results or those anticipated, including
those factors discussed under Item 1A, entitled "Risk Factors", included in
the Company's May 31, 2007 Form 10-K. Should one or more of these risks or
uncertainties materialize adversely, or should underlying assumptions or
estimates prove incorrect, actual results may vary materially from those
described. These events and uncertainties are difficult or impossible to
predict accurately and many are beyond the Company's control. The Company
assumes no obligation to publicly release the result of any revisions that may
be made to any forward-looking statements to reflect events or circumstances
after the date of such statements or to reflect the occurrence of anticipated
or unanticipated events. For additional information, see the comments
included in AAR's filings with the Securities and Exchange Commission.
SOURCE AAR CORP.
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