Top aviation leasing company AerCap Holdings N.V. will be able to recover an estimated $1 billion from the insurers in losses with respect to aircraft that it lost to Russia, the company has announced.
AerCap Holdings wins in court
AerCap Holdings Ireland, an AerCap subsidiary, will be able to claim a $1 billion indemnity in losses as per a London High Court ruling on Wednesday.
The London Court has allowed the aircraft lessor to claim these through a “contingent and possessed insurance policy” under the “War and Allied Perils” section of insurance coverage.
The ruling that allowed the aircraft lessor to claim these funds was in respect to the aircraft and engines that belonged to the company and are stuck in Russia following its invasion of Ukraine in February 2022. This is less than the over $2 billion of the funds that the company claims it has lost.
This indemnity amount is due to be paid by July 2, 2025. The company said that all questions related to cost and interest have been adjourned for now, and a hearing will be fixed in September of this year for the same.
The company said in a press release:
“In 2022, we recognised a pre-tax net charge of $2.7 billion to our earnings, which included a total loss write-off with respect to the assets which remained in Russia and Ukraine and impairment losses with respect to the assets which we had recovered from Russia and Ukraine at that time. Following recoveries of $1.3 billion in 2023 and $195 million in 2024, this indemnity award will bring AerCap’s total pre-tax recoveries relating to the Ukraine conflict to approximately $2.5 billion. “
It added:
“The claims against insurers and reinsurers of the Russian airlines’ insurance policies in respect of a number of these assets remain ongoing in the Commercial Court in London and we intend to continue to vigorously pursue those claims. However, the collection, timing and amount of any potential further recoveries in respect of those claims are uncertain.”
London court rules in favour of aircraft leasing firms
In a court case that has been ongoing for five months, the London High Court on Wednesday ruled largely in favour of airline leasing firms that include AerCap and Dubai Aerospace Enterprise (DAE). The case related to aircraft and engines that have been “lost” to Russia following the Ukraine invasion. The case is about insurance claims related to 147 aircraft, 16 standalone engines and one piece of other equipment with an insurance value of around $4.5 billion.
The judgment stated that:
“The aircraft has been lost, and that loss occurred on 10 March 2022, when a piece of Russian legislation banned the export of aircraft and aircraft equipment from Russia.”
Given the circumstances, the ruling allowed aircraft leasing firms to recover losses through their “war risk insurers.”
About AerCap
The company is the world’s largest aircraft leasing company with around 300 customers across the globe. The Dublin-based company has offices in Dubai, Miami, Shannon, Miami, Singapore, Amsterdam, Memphis, and Shanghai, among other locations.
What do you think about this court ruling? What are the insurers’ responsibilities during conflict and war? Let us know your thoughts in the comments!
