AXA and jet lessor DAE strike deal as UK fight over Russian ‘seized’ jets begins

Aircraft lessor Dubai Aerospace Enterprise (DAE) has struck a deal with insurer AXA AXAF.PA over planes held in Russia since the 2022 invasion of Ukraine, raising the prospect of new deals as the High Court’s “mega trial” begins in London.

Alistair Schaff, DAE’s lawyer, said on the first day of the trial on Wednesday that a confidential settlement had been secured and DAE’s remaining claim was on 19 missing planes.

A source familiar with the negotiations said a full and final agreement had been reached between DAE and AXA on the relevant parts of the AXA-insured DAE policy.

Global insurers fight London court over jets seized in Russia

AXA’s commercial insurance arm, AXA XL, declined to comment.

News of the settlement came after Mark Howard, a lawyer for the world’s biggest aircraft lessor, AerCap AER.N, told the court that insurers must know there is no realistic prospect of the Western-owned planes and engines being returned.

“The reality is that the aircraft and the engines were lost,” he said.

In one of the biggest insurance disputes to be heard in London, AerCap, DAE, Merx Aviation, KDAC Aviation Finance and Falcon are up against insurers including AIG, Lloyd’s, Chubb and Swiss Re.

The fast-track case, which will conclude by the end of the year, is seen as a benchmark for parallel lawsuits in Ireland and the United States over who should pay for about 400 planes, valued at nearly $10 billion, that remain in Russia after West imposed sanctions for the war.

The London trial focuses on claims related to nearly 150 planes, along with some engines, that were originally valued at about $4.7 billion. But some deals with Russia — albeit at prices below the insured value — brought the value down to nearly $3.0 billion.

The insurers argue in part that there is no evidence that the aircraft were destroyed or damaged, that the assets are no longer subject to leases or that the policies do not cover the events that led to their non-return.

The lessors said in court filings that they sought compensation from Russia. DAE said its president, David Houlihan, made a weeklong trip to Moscow in March 2022 to meet with tenants — to no avail, the documents show.

Lessors claim compensation under “contingent and possessed” policies which may provide cover under a broad, all-risks clause for loss or damage to the aircraft or under a more specific war risks clause.

AerCap, which says it has lost 116 aircraft and 15 engines, is suing for $2.06 billion under its all-risks insurance policy, or alternatively $1.2 billion under its war risk policy, pending new agreements with Russia, court filings show.

In court filings, DAE valued its claim for 22 planes, one engine and one piece of equipment at $737.8 million. Merx is seeking $184 million for six planes, while Falcon is seeking $43.4 million for two planes and KDAC is suing for $21.5 million for the loss of one plane, court filings show.

The lessors have separately taken on reinsurers, some of whom lost a battle in March to have the case moved to Moscow, and some are also approaching the insurers over the planes stuck in Ukraine.

(Reporting by Kirstin Ridley and Sam Tobin, additional reporting by Carolyn Cohn; Editing by Barbara Lewis, Alexandra Hudson)

TOPICS
Aviation Russia AXA XL