The Dublin commercial court has become the stage for a high-stakes legal battle involving 16 insurance companies, including industry giants Lloyd's of London, Chubb European Group, AIG Europe, and Swiss Re. At the heart of this complex case are claims made by the world's largest aircraft lessors against insurers, relating to the stranding of approximately 400 planes in Russia. The unfolding drama represents one of the most significant and intricate commercial cases ever heard, with potentially hundreds of millions of euros in legal fees.
Aercap, the world's largest aircraft lessor, has already managed to secure settlements out of court amounting to over $1.3 billion with insurance companies. Initially, Aercap estimated its losses at $3.5 billion (£2.9 billion) due to the stranding of planes, highlighting the financial magnitude of the situation. The legal action against the 16 insurance companies was initiated in November 2022, and proceedings are anticipated to continue for months.
Joining Aercap in their pursuit of compensation are the world's second and third-largest lessors, SMBC and Avolon, who are also pursuing their claims within Ireland. This concentration of litigation underscores Ireland's pivotal role in the global aircraft leasing industry, with more than 60% of the world's leased aircraft owned or managed within its borders.
The legal dispute stems from the impact of Western sanctions imposed on Russia, which forced aircraft leasing companies to terminate their contracts with Russian carriers by March 28, 2022. These sanctions have not only led to the stranding of planes but have also deprived the Kremlin of essential Western-made parts necessary for engine production. Consequently, Russia's ability to produce more than 1,000 new aircraft over the next six years has been severely constrained.
The estimated value of aircraft currently stranded in Russia stands at approximately €2.5 billion (£2.1 billion), reflecting the significant financial implications for lessors and insurers alike. The ongoing legal proceedings aim to address these substantial losses while setting a precedent for similar cases in the future.
Meanwhile, Russian aviation historian Steven Harris has described the Kremlin's ambitious plan to manufacture 1,036 planes by 2030 as reminiscent of Soviet-era aspirations to achieve self-sufficiency and reduce dependency on Western technology. However, the current geopolitical landscape presents considerable challenges to realizing this vision.
Russia's civil aviation industry has also experienced a sharp decline in passenger numbers traveling to Europe. Data from Rosaviatsia, Russia's civil aviation watchdog, reveals a dramatic drop from nearly 10 million passengers in 2019 to just a few hundred thousand. This decline further emphasizes the profound impact of Western sanctions on Russia's aviation sector.