World’s Largest Aircraft Owner Set to Receive $1 Billion Payout in Stranded Russian Planes Case

The world’s largest commercial aircraft owner, AerCap, is poised to receive a payout exceeding $1 billion after a UK High Court judge ruled that insurers must cover losses from planes stranded in Russia due to the country’s invasion of Ukraine.

The case involved over 147 aircraft owned by a group of lessors, which were left in Russia following Moscow’s full-scale invasion of Ukraine. The insurers, including AIG, Lloyd’s of London, and Chubb, have been ordered to cover the losses under a “war risks” policy, which is specific to losses resulting from acts of war, such as the conflict in Ukraine.

While the payout is substantial, it is lower than what AerCap had initially sought. The judge determined that the aircraft should be covered under the “war risks” policy rather than the broader “all risks” policy, which would have resulted in a higher compensation amount.

Other aircraft leasing companies, including Merx Aviation and Dubai Aerospace Enterprise, are also in line for payouts under the same “war risks” policy, though the final sum for these companies is yet to be finalized.

This case is one of the most complex and costly heard by the High Court. The judge explained that the loss occurred on March 10, 2022, when Russian legislation prohibited the export of aircraft and aviation equipment from Russia. As a result, the loss was deemed to be caused by “an act or order of the Russian government,” which falls under the “war risks” policy, according to the ruling.

EU or US sanctions were not found to hinder the insurers from indemnifying the claimants for the loss of aircraft leased to Russian airlines.

AerCap’s legal team, Herbert Smith Freehills Kramer, celebrated the victory, noting that the company secured a payout of $1.035 billion, in addition to significant recoveries achieved through previous settlements.

Sources: AirGuide Business airguide.info, bing.com, ft.com