The Government has temporarily indemnified Irish airlines against the specific war risks insurers had refused to cover following the US attacks. A scheme was due to be in place from midnight last night, a Department of Public Enterprise spokesman said yesterday. No details were available, he said. It is understood the Government is not taking out insurance to cover the risk. It will only suffer loss if an Irish aircraft is hijacked by terrorists or attacked in a war and subsequently injures people or property on the ground.

Six Irish airlines will be covered including Aer Lingus, Ryanair, Aer Arann, CityJet and two cargo operators. It is understood that the scheme, drawn up over the weekend, was agreed by the Government last evening via telephone calls to get the approval of each cabinet minister.

Notice from insurers that they intended to cancel or severely restrict third-party cover for war liabilities threatened to ground world airlines from midnight last night. After the US attacks airline insurers cut third-party war risks cover they were prepared to offer world airlines to $50 million (€54.68 million). Airlines said they needed cover of $700-$750 million under the terms of their agreements with aircraft lessors. This covers damage or injury to third parties on the ground caused by an aircraft hit in war or by terrorism.