(Bloomberg) -- Insurance companies are trying to delay billions of dollars of claims for hundreds of aircrafts seized in Russia, lawyers for some of world’s top aircraft leasing companies alleged at the start of a London trial.
Lessors such as AerCap Holdings NV sued insurers including units of AIG and Lloyd’s after Russia refused to return jets leased to local airlines following the invasion of Ukraine and the imposition of sanctions by Western nations. Russia transfered almost 800 foreign-owned jets to its own aircraft register after contracts were terminated.
While AerCap’s initial case for $3.4 billion has been cut to over $2 billion after settlements, claims by other lessors in the case also run into hundreds of millions of dollars, according to documents given to the court ahead of Wednesday’s hearing. Insurers deny the claims and are contesting the case citing exceptions and exclusions in their policies.
The insurance market is “putting off the day of payment until a market-wide solution can be reached,” lawyers for AerCap said in documents given to the court before the Wednesday hearing. “While it must know a day of reckoning is coming it has not yet decided how it wishes to meet it.”
Insurance companies previously contended the planes are not lost as Russian airlines continue to use them and specific exclusions in the policies apply, negating cover. Lawyers for insurers are yet to open their case in the trial.
Of AerCap’s 141 aircraft and 29 standalone aircraft engines, 116 jets and 15 engines remain in Russia, being used by 15 airlines including Aeroflot, the nation’s largest.
“The reality, which has been obvious for some considerable time, is that the aircraft and engines are 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 run 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 could be seismic,” said Garbhan Shanks, a partner at law firm Fladgate. Fitch Ratings had in 2022 pegged the total insured residual value of aircraft held by Russia at $13 billion. Many claims have since been settled.
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