FT: insurers face “mega-sue” due to foreign aircraft stuck in Russia

Foreign leasing companies are filing claims against insurers because of their refusal to pay compensation for aircraft that Russian airlines refused to return. The amount of total insurance claims exceeds $ 3.5 billion, the newspaper reports. Financial Times.

The largest aircraft lessors demanded that Russian airlines return the planes after Western countries imposed sanctions against Russia. The carriers refused to return the aircraft to the lessors, after which they requested payment of compensation for the loss of the aircraft from the insurance companies.

According to the FT, the insurance companies refused to pay out, because, in their opinion, the confiscation of the aircraft under the terms of insurance is not a loss. As a result, the lessors decided to file suits against the insurers in order to obtain payments.

According to the FT, AerCap, one of the world’s largest lessors, filed a $3.5 billion lawsuit against AIG, Fidelis and Lloyd’s of London for the loss of 116 aircraft. At the same time, Lloyd’s of London partially insured the aircraft against losses due to “war risks”. The lawsuit was also filed by Dubai Aerospace Enterprise, and 11 insurance companies are the defendants. The amount of the claim is not specified.

The cases will be heard in the High Court of London. The lawsuits were decided to be combined into one process to save time. An AerCap spokesperson called the single process a procedural nightmare, as the company would not be able to get the money quickly if it did so. The FT did not disclose the total amount of the claim, but notes that the process will be one of the largest insurance claims in many years.

In the spring of 2022, after the introduction of sanctions against the Russian aviation industry, foreign lessors unilaterally terminated the leasing agreements for more than 700 aircraft and demanded their return. The airlines transferred most of the planes to the Russian registry and refused to return them. According to Kommersant, S7 and AirBridgeCargo asked permission from the Ministry of Transport to return their leased aircraft to foreign registries.

About AerCap’s claim against insurers for $3.5 billion became known in October 2022. As the FT wrote, the insurers explained their refusal by saying that they did not consider the confiscation to be the loss of the aircraft, as this happened for political reasons. Also a lawsuit against insurers for $ 700 million filed investment company Carlyle Aviation Partners.

Olesya Pavlenko