Avolon, one of the largest aircraft lessors in the world, has settled a lawsuit against insurers after suffering more than $300 million (€289 million) of losses when a number of its planes were seized by Russian airlines following the country’s invasion of Ukraine three years ago.
The Dublin-based company had supplied 14 aircraft to Russian carriers at the time of the outbreak of the war, but was able to recover four of them shortly afterwards.
It recorded a $304 million impairment in the first three months of 2022 when it wrote the carrying value of 10 aircraft on its balance sheet down to zero.
It sued Lloyds Insurance Company and other insurers when they refused to provide indemnity after the planes were detained.
“Avolon has reached commercial resolution with its insurers in respect of its aircraft detained in Russia that were subject to proceedings in the High Court of Ireland and has now discontinued all the proceedings,” a spokesman for the company told The Irish Times, responding to questions.
“We cannot comment on any financial impact as we are in a closed period in advance of publishing our full-year 2024 results on 13 February.”
The settlement follows the accumulation of significant legal costs by Avolon and its insurers as part of the legal battle. They were part of a mammoth High Court case between lessors and insurers that began public hearings last June.
Others involved in the trial include lessors SMBC, BOC Aviation, CDB Aviation, Nordic Aviation Capital and Hermes Aircraft A1264. Parties on the other side include insurers and reinsurers such as Lloyds, Chubb, AIG and Fidelis.
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It is understood that other settlements have also been reached, but the scope of these could not be confirmed on Thursday evening.
The case, which opened before Ms Justice Eileen Roberts last June, has involved about 180 lawyers and was estimated at the time to have the potential to result in legal fees running into hundreds of millions of euros.
A parallel case has also been going on in London’s High Court, involving parties such as Dublin-based AerCap, the world’s largest aircraft lessor, which lost 116 planes and 23 engines as a result of the war.
AerCap initially estimated its losses at $3.5 billion. It had received $1.3 billion in 2023 from settling certain cases with airlines and insurers, but is continuing to pursue other claims.
Irish aircraft lessors were among the first businesses caught up in the fallout from the conflict sparked by Russia’s invasion of Ukraine, given that over 60 per cent of the world’s leased aircraft are managed from this country. The Republic’s position as a big leasing hub can be traced back to the late Tony Ryan’s founded Guinness Peat Aviation (later GPA Group) 50 years ago in Shannon, Co Clare.
The plaintiffs said at the outset of the trial that when the Russians invaded Ukraine on February 24th, 2022, the aircraft were subject to aircraft lease agreements with Russian airlines.
Following the imposition of EU sanctions on Russia, the leasing firms sought the return of the aircraft, but they were not returned.
The firms were seeking orders and declarations including that they are entitled to cover under either “war–risk” or “all-risk” policies.
The insurance firms denied that all–risks or war–risks policies are engaged. It was argued by some insurers that there had not been a physical loss of the planes yet, or that the planes are still in the course of being repossessed.
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