Avolon, an aircraft leasing company based in Dublin, has taken legal action against Lloyds Insurance in the Irish High court over losses linked to Russia-Ukraine war, according to a Reuters report.
Following European Union sanctions that forced the termination of all Russian leases, the lessor recorded a first-quarter impairment of $304 million to cover the financial impact of having 10 jets stuck in the country.
More than 500 Western-built aircraft worth roughly $10 billion are thought to be stranded in Russia after the US, UK and EU enacted a number of sanctions against the Russian government and Russian entities.
In response to these sanctions, the Russian government prohibited the repatriation of aviation assets to international lessors, who were obligated to terminate their leases and demand the return of the aircrafts in March 2022.
According to Reuters, a spokesperson for Avolon declined to give any details of the claim saying: “We have always maintained that we will rigorously pursue our claim and issuing proceedings now is the next stage in that process.”
Other aircraft leasing companies that have taken insurers to court over their insurance claims, including Aercap, the largest global aircraft leasing firm. It reported a $2.7 billion net loss in the first three months of 2022 after 113 of its jets and 11 engines remained stuck in Russia, according to City A.M.
Aercap filed a lawsuit against AIG and other insurers including Lloyd’s business Atrium in July. It followed a $3.5 billion all-risk claim filed in March over aircraft lost in the country, which the lessor’s insurers refused to pay out on.
According to DBRS Morningstar the risk of a prolonged Russian invasion of Ukraine will further complicate the resolution of aircraft leasing insurance claims. Experts believe that this issue would take years to settle, and it would require complex arbitration and legal procedures.