Aircraft lessor Dubai Aerospace Enterprise (DAE) has secured a settlement with insurer AXA over aircraft stranded in Russia following the 2022 invasion of Ukraine, marking a potential precedent as a high-profile trial begins in London.
During the first day of the trial, DAE's lawyer, Alistair Schaff, revealed that a confidential settlement had been reached, though DAE continues its claim regarding 19 missing jets.
A Reuters report confirmed that the settlement resolves portions of DAE’s policy covered by AXA. AXA's commercial insurance unit, AXA XL, meanwhile, declined to comment on the case.
The settlement emerged as Mark Howard, representing AerCap, the world’s largest aircraft lessor, argued in court that insurers must accept that Western-owned jets and engines held in Russia are unlikely to be returned. "The reality is that the aircraft and engines are lost," Howard said.
The fast-tracked trial, expected to conclude by the end of the year, is expected to as a bellwether for related lawsuits in Ireland and the United States over who should bear the costs for nearly 400 planes valued at approximately $10 billion that remain in Russia following Western sanctions.
The London trial focuses on claims involving roughly 150 jets and several engines, originally valued at up to $4.7 billion. However, settlements with Russian entities, at prices below insured values, have lowered the total claim closer to $3 billion.
Insurers contest the claims, arguing that there is insufficient evidence to confirm the aircraft have been destroyed or damaged. They also argue that the assets are no longer subject to lease agreements or that the insurance policies in question do not cover the circumstances surrounding the aircraft’s retention in Russia.
According to court filings, lessors have sought compensation from Russian entities. Documents show that DAE's president, David Houlihan, travelled to Moscow in March 2022 to meet with lessees, but these efforts proved unsuccessful.
The lessors are seeking compensation through "contingent and possessed" policies, which may provide cover under broad all-risk clauses or more specific war-risk clauses. AerCap, which claims the loss of 116 aircraft and 15 engines, is pursuing $2.06 billion under its all-risks policy or, alternatively, $1.2 billion under a capped war-risks policy, pending further developments with Russia.
DAE's claim involves 22 aircraft, one engine, and one piece of equipment, with a total value of $737.8 million. Merx is claiming $184 million for six aircraft, Falcon $43.4 million for two aircraft, and KDAC $21.5 million for one jet, according to court filings.
The lessors have also initiated separate actions against reinsurers, some of which lost a legal battle in March to have the case moved to Moscow. In addition, the lessors are engaged in disputes with insurers over jets stranded in Ukraine.
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