The world’s biggest commercial aircraft owner, AerCap, is set to receive an insurance payout of more than $1bn. This comes after a High Court judge ruled insurers had to cover losses from planes stranded in Russia.
The payout is one of the largest sums ever awarded by the English courts. Insurers, including AIG, Lloyd’s of London, and Chubb, were told to provide cover for more than 147 planes owned by AerCap. These planes were stranded in Russia following the country’s invasion of Ukraine.
The size of the payout is, however, lower than the company had sought. This is because the judge found that the aircraft should be covered under a “war risks” policy rather than an “all risks” policy. An “all risks” policy would have resulted in a higher award. Other aircraft leasing companies, including Merx Aviation and Dubai Aerospace Enterprise, are also set for payouts under the “war risks” policy. Nonetheless, the final sum is yet to be determined.
In a summary of his judgment on Wednesday, High Court Judge Mr Justice Butcher ruled the “loss occurred on 10 March 2022. This was when a piece of Russian legislation banned the export of aircraft and aircraft equipment from Russia”. Consequently, the cause of the loss was “an act or order of the Russian government” and should be covered by the “war risks” policy.
He added that EU or US sanctions did not prevent the insurers from indemnifying the claimants for the loss of aircraft leased to Russian airlines, hence AerCap, was able to secure a $1.035bn payout “in addition to substantial recoveries achieved in prior settlements”.
