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HEATHROW TALLIES LOSSES

Posted On: Dec. 21, 1997 12:00 AM CST

LONDON -- Insured losses will total about 2.7 million pounds ($4.4 million) from a fire earlier this month at Heathrow Airport.

The sum includes insured damage to the airport terminal, mainly to its roof, and some expected business interruption claims, said Barry Woodward, managing director of Property & Casualty Services of Manchester, England, a loss adjuster for the fire.

The fire occurred Dec. 12 in Heathrow's Terminal 1, which serves domestic and intra-European flights. Although use of the terminal returned to near normal within 24 hours, commuter access to the airport was disrupted for several hours, and many flights were canceled or delayed (BI, Dec. 15).

Investigators still are determining the cause of the blaze. Early reports from firefighters said it began in a ventilation duct above a Burger King restaurant in the terminal. The fire was confined to the terminal's ceiling space, though the passenger concourse had minor smoke and water damage.

Mr. Woodward said the estimate of 2.7 million pounds in claims for the British Airports Authority P.L.C., which operates Heathrow, is a "reasonable reserve" figure based on anticipated claims.

Business interruption claims from the BAA and airlines are expected to be relatively minor, though, since most of the flights that were canceled that day were rescheduled over the next couple of days, meaning the airport lost little in takeoff and landing fees.

Mr. Woodward said business interruption claims likely would be filed by some of the numerous concessionaires occupying Terminal 1, where the fire occurred.

Those claims would go to the concessionaires' own property insurers, unless BAA is proven to have been negligent, in which case the concessionaires' insurers might try to recoup any payments from BAA's insurers.

Alternatively, they and the BAA may seek compensation from Burger King, or its insurers, if the fire investigation proves the restaurant operators at fault.

Although the Burger King chain is owned by what is now Diageo P.L.C., a company formed last week by the merger of Grand Metropolitan P.L.C. and Guinness P.L.C., the franchise for Burger Kings at U.K. airports and train stations is operated by Select Service Partners, a unit of catering group Compass Group Services Ltd.

London-based Independent Insurance Co. Ltd., one of the BAA's co-insurers, appointed PCS to adjust the claim.

The lead insurer for the BAA's coverage is Royal & Sun Alliance Insurance Group P.L.C. Willis Corroon Group P.L.C. is the BAA's broker.