A Leading Aircraft Lessor Sues Insurers For Not Covering Russian Plane Losses

November 10th, 2022
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A Leading Aircraft Lessor Sues Insurers For Not Covering Russian Plane Losses

When Russia’s invasion of Ukraine led to sanctions, many predicted it would lead to a nightmare scenario for the aviation industry. This is because assets held by lessors were worth billions of dollars and it would be difficult to get insurance on them. And indeed, aircraft lessors have lost billions of dollars and they are not happy that insurers won’t release the money.

Carlyle Aviation Partners, one of the world’s largest aircraft leasing operators, has applied to more than 30 insurers and reinsurers for a new policy that will cover losses related to jets stuck in Russia.

The Financial Times reported that, late on October 31st, a motion was filed in a Florida court. The filing covers the policies of 23 planes following the fallout from the war in Ukraine. It includes claims from insurance companies who are “not giving immediate or serious attention” to claims they received during March of 2022.

The lawsuit was brought by Carlyle Aviation’s UK and US branches, which are referred to in the claim as a “Carlyle plaintiff”. Nine separate breaches of contract have occurred.

Sixteen planes remain unaccounted for

The Carlyle case reportedly concerns 16 Boeing and seven Airbus aircraft leased to 12 different airlines. Five of them, all Boeing 737-800s, are operated by Siberia’s UTair, the country’s sixth-largest airline by passengers carried in 2021. The lessor also had three aircraft with Nordwind Airlines, one Boeing 777 with Rossiya Airlines, two 737-800s with S7, and one 737-700 fro low-cost carrier Smartavia.

Of nine, four are in Rosobornexport. One Boeing 737-800 is with Azur Air (charter) in Egypt; the Egyptian authorities are also uncooperative but have allegedly indicated they will release it if storage and parking fees are paid.

The Carlyle Aviation Partners told the Financial Times that it was suing because it has exhausted all avenues to recover the aircraft and insurers have not paid despite following a strict procedure.

$10 billion lost

Russia invaded Ukraine and sanctions followed. This left foreign lessors with 515 planes in the country, with a combined market value of over $10 billion. To skirt the law and escape sanctions, they were allowed to re-register their aircraft in Russia. ICAO protested this decision.

With billions of dollars at stake for lessors whose assets have been pirated, this is surely not the first case where insurance and leasing companies find themselves going head-to-head over parting with funds to cover enormous losses. The outcome from this case could set billions in precedent from this crisis and any more that may come in the future.