Leasing companies have filed a lawsuit for more than $3.5 billion over insurers’ refusal to pay compensation for planes that Russian airlines refused to return after military operations began in Ukraine. They write about it FinancialTimes (FT) and Reuters .
The trial, which the FT describes as a “mega trial”, will begin in 2024 at the High Court in London. According to the newspaper, it will become one of the largest in the UK insurance industry in recent years.
The plaintiffs are the largest commercial aircraft owner AerCap, as well as Dubai Aerospace Enterprise, Merx Aviation, KDAC Aviation Finance and Falcon. Complaints have been consolidated into one process to save time.
The defendants are 11 insurance companies, including AIG, Lloyd’s of London, Fidelis, Chubb and Swiss Re.
The largest plaintiff, AerCap, is claiming $3.5 billion from insurers for the loss of 116 planes and 23 engines. At the same time, Lloyd’s of London insured the company’s planes for 1.2 billion dollars against “war risks”, notes the Financial Times.
DAE and Falcon estimate the loss of 21 aircraft and equipment at $900 million, while Merx is seeking more than $255 million for the loss of six aircraft and engines. KDAC is suing for $21.5 million for the loss of an aircraft, Reuters said.
AerCap objected to the consolidation of the claims into one. Company spokesman Mark Howard called the upcoming trial a “procedural nightmare” and urged the court to review the case as soon as possible.
“(The evidence) suggests that we lost a billion or $3 billion out of our own pocket. <…> It's a colossal amount," Howard said.
Donor problems with Russian aircraft
After the EU and UK imposed sanctions on Russia over the military operation in Ukraine, AerCap demanded that Russian airlines return the leased aircraft, writes FT. However, these requirements were not met: the carriers re-registered the aircraft in Russia and continued to use them.
After that, the lessors demanded compensation from the insurance companies for the loss of aircraft. However, the insurers refused to pay, saying the confiscation of the plane was not a loss under the terms of the insurance.
Prior to the imposition of sanctions, Russian airlines used 135 AerCap aircraft and 14 engines worth $3.1 billion. Shortly after the outbreak of hostilities in Ukraine in March 2022, the leasing company was able to seize 22 aircraft and three engines from Russian carriers of a book value of $400 million.
After the outbreak of hostilities in Ukraine, the European Union, Great Britain, Canada and the United States banned the supply of spare parts, maintenance, assistance and insurance of Russian aircraft. In addition, Russian carriers were forced to return planes leased to foreign companies. After that, dozens of planes leased by Russia were stopped abroad. In March 2022, Russian President Vladimir Putin signed a law allowing the registration of rights to foreign aircraft leased by Russian companies.
