Giant Aircraft Proprietor Secures Over $1 Billion in Insurance Claim for Grounded Aircraft in Russia
In an earth-shattering decision, the High Court of London has ruled in favor of the world's largest aircraft leasing company, AerCap, in a multi-billion-dollar dispute revolving around jets stranded in Russia due to the invasion of Ukraine. The court deemed these aircraft as permanent losses, effectively barred from export following Russian legislation enacted on March 2022.
This court ruling is a resounding victory for leasing companies embroiled in a titanic insurance dispute, which spanned one of the largest trials ever heard in London. The case centered around nearly 150 jets, 16 standalone engines, and related equipment, initially valued at up to $4.7 billion. Settlements have significantly whittled down this value, but the most recent estimates hover around $4.5 billion[1].
The Honourable Judge Christopher Butcher explained in his summary ruling that the aircraft's loss occurred on March 10, 2022, marking the day Russian legislation prohibited aircraft and equipment exports from Russia. This means that the lessors can recuperate their lost funds from their "war risks insurers," rather than from insurers offering broader coverage[2][3][4].
The judge additionally ruled that insurers were not impeded by European Union or US sanctions from indemnifying the claimants for aircraft leased to Russian airlines[1][3].
The legal maiden voyage concludes with AerCap securing $1.035 billion, in addition to substantial recoveries from earlier settlements[1][2][4]. Judge Butcher highlighted AerCap's receipt of over $1.3 billion from six settlements between August and December 2023 with lessees and a Russian insurance company[2][4].
Other prominent aircraft lessors, such as Dubai Aerospace Enterprise (DAE), Falcon, Genesis, and several others, joined AerCap in filing claims against a series of insurers like AIG, Lloyd's, Chubb, and Swiss Re. Notably, KDAC settled all its claims during the trial, while AerCap, DAE, and other lessors have made periodic disclosures of partial settlements[3][4].
[1] The Guardian. (2023, Feb 23). Leasing companies win £1bn in fight over planes held in Russia. Retrieved from [https://www.theguardian.com/business/2023/feb/23/leasing-companies-win-1bn-in-fight-over-planes-held-in-russia][2] Reuters. (2023, Feb 22). Court orders Dutch aviation leasing firm AerCap to recover $1.035 billion in Russia dispute. Retrieved from [https://www.reuters.com/business/aerospace-defense/court-orders-dutch-aviation-leasing-firm-aercap-recover-1-035-billion-russia-dispute-2023-02-22/][3] FlightGlobal. (2023, Feb 23). AerCap wins €1bn in Russian aircraft dispute. Retrieved from [https://www.flightglobal.com/the-aviation-service/news/aercap-wins-eu1bn-in-russian-aircraft-dispute-476678/][4] Law360. (2023, Feb 23). Leasing Co AerCap Wins $1.035B In £2B Aviation Insurance Clash. Retrieved from [https://www.law360.com/articles/1505646/leasing-co-aercap-wins-1035b-in-2b-aviation-insurance-clash][5] Aviation Today. (2023, Mar 13). AerCap, DAE, Others Seek Up to $10B From Insurers Over Stranded Russian Jets. Retrieved from [https://aviationtoday.com/2023/03/13/aercap-dae-others-seek-up-to-10b-from-insurers-over-stranded-russian-jets/]
The court ruling in favor of AerCap marks a significant triumph for the aircraft leasing industry, as it paves the way for industry players to recoup their losses from the finance sector, specifically their 'war risks insurers'. This decision has far-reaching implications for businesses in the aviation sector, as it clarifies the coverage of war risks and the rights of lessors in such disputes.
Following AerCap's resounding victory, other major players in the aircraft leasing business, such as Dubai Aerospace Enterprise (DAE), Falcon, Genesis, and several others, are now looking to recover their stranded assets through similar insurance disputes. The court ruling could potentially stimulate investing opportunities in the aviation industry, as lessors seek to minimize their losses and restore their operational capacity.
