(Bloomberg) — Insurance companies are trying to delay billions of dollars in claims for hundreds of planes seized in Russia, lawyers for some of the world’s top aircraft leasing companies argued at the start of a trial in London.
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Lessors such as AerCap Holdings NV have taken insurers including units of AIG and Lloyd’s to court after Russia refused to return planes leased to local airlines following the invasion of Ukraine and the imposition of sanctions by Western countries. Russia has transferred almost 800 foreign-owned aircraft to its own aircraft registry after contracts ended.
Although AerCap’s original $3.4 billion case has been reduced to more than $2 billion after settlements, claims from other lessors in the case also amount to hundreds of millions of dollars, according to documents submitted to the court ahead of Wednesday’s hearing have been handed over. Insurers deny the claims and dispute the case, citing exceptions and exclusions in their policies.
The insurance market is “delaying payment day until a market-wide resolution can be reached,” lawyers for AerCap said in documents submitted to the court ahead of Wednesday’s hearing. “While it needs to know that a day of reckoning is coming, it has not yet decided how it will meet it.”
Insurance companies previously claimed that the planes will not be lost because Russian airlines continue to use them and specific exclusions in the policies apply, negating the coverage. Lawyers for insurers have yet to open their case in the lawsuit.
Of AerCap’s 141 aircraft and 29 standalone aircraft engines, 116 jets and 15 engines remain in Russia, used by 15 airlines, including Aeroflot, the country’s largest.
“The reality, which has been clear for some time, is that the aircraft and its engines were lost,” AerCap’s lawyer Mark Howard said in court.
Spokespeople for Aercap, LLoyd’s and AIG all declined to comment. The trial is expected to last until December and a ruling could take months after that.
“These are complex, hard-fought claims where the stakes are high and the long-lasting impact can be seismic,” said Garbhan Shanks, partner at law firm Fladgate. Fitch Ratings had pegged the total insured residual value of Russian-owned aircraft at $13 billion in 2022. Many claims have now been settled.
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