Pan Am Flight 103 from London to New York explodes in midair over Lockerbie, Scotland, an hour after departure. A bomb that had been hidden inside an audio cassette player detonated inside the cargo area when the plane was at an altitude of 31,000 feet. All 259 passengers, including 35 Syracuse University students returning home for the holidays, were killed in the explosion. In addition, 11 residents of Lockerbie were killed in the shower of airplane parts that unexpectedly fell from the sky.
Authorities accused Islamic terrorists of having placed the bomb on the plane at the low-security airport in Malta, and it was transferred to Flight 103 in Frankfurt, Germany. They apparently believed that the attack was in retaliation for either the 1986 bombing attack on Libya , or a 1988 incident, in which the United States killed 290 passengers when it mistakenly shot down an Iran Air commercial flight over the Persian Gulf.
Sixteen days before the explosion over Lockerbie, a call was made to the U.S. embassy in Helsinki, Finland, warning that a bomb would be placed on a Pan Am flight out of Frankfurt. Though some claimed that travelers should have been alerted to this threat, U.S. officials later said that the connection between the call and the bomb was purely coincidental.
In the early 1990s, investigators identified Libyans Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah as suspects, but Libya refused to turn them over to be tried in the United States. But in 1999--in an effort to ease United Nations sanctions against Libya--President Moammar Gadhafi agreed to turn the suspects over to Scotland for trial in the Netherlands using Scottish law and prosecutors. In early 2001, al-Megrahi was convicted and sentenced to life in prison, although he continues to profess his innocence and work to overturn his conviction. Fhimah was acquitted.
In accordance with United Nations and American demands, Libya accepted responsibility for the bombing, though it did not express remorse. The U.N. and U.S. lifted most sanctions against Libya; the country then paid each victim's family approximately $8 million in compensation. In 2004, Libya's prime minister said that the deal was the "price for peace," implying that his country only accepted responsibility to get the sanctions lifted, angering the survivors' families. He also admitted that Libya had not really accepted guilt for the bombing.
Pan Am Airlines, which went bankrupt in 1991, received a $30 million settlement from the Libyan government in 2006.