Right job, wrong man

An aviation technical consultant and asset manager was insured, amongst other activities, for the provision of aircraft engine borescope inspections.

They entered into a contract with a lessor for the borescope inspection of 37 engines. The engines were attached to a commercial widebody aircraft which had been re-delivered back to the lessor from a major aircraft operator. They were then put into storage in “as is where is” condition.

Upon completion of the inspections, but prior to the inspector issuing any “Release to Service” paperwork, the lessor became aware that while their inspector did have qualifications to perform borescope inspections generally, he did not have the specific qualifications needed for these engines.

They were therefore unable to issue the “Release to Service” of the engines. This meant that the lessor would have to have inspections performed again, and that all the substantial costs of carrying out these inspections were wasted. There was also the potential that the lessor could lose a potential sale of an asset due to the delay.

As the aircraft and engines were kept “preserved” in storage, the lessor incurred various costs getting them ready for inspection and putting them back into storage after the inspections. These costs included: the rental of an inflatable tent in which the inspections would be carried out, the transportation of the tents from Ireland to France (and vice versa), the un-preservation and re-preservation of the engines (engines that are not being used must be stored in corrosion preventive materials) and project management costs. The lessor’s claim against the inspector was originally US$ 641,071.

ITIC was able to negotiate this down to US$ 417,878 in full and final settlement of the matter.