UAE’s DAE, AXA clinch deal as battle over jets ‘lost’ in Russia kicks off

Aircraft lessor Dubai Aerospace Enterprise (DAE) has secured a settlement with insurer AXA over jets retained in Russia since the 2022 invasion of Ukraine, raising the prospect of further deals as a London High Court “mega trial” kicked off.

Alistair Schaff, a lawyer for DAE, told the first day of the trial on Wednesday that a confidential settlement had been secured and DAE’s remaining claim turned on 19 missing jets.

One source familiar with negotiations said a full and final settlement had been reached between DAE and AXA in respect of the relevant portions of DAE’s policy insured by AXA.

AXA’s commercial insurance arm, AXA XL, declined to comment.

News of the deal came after Mark Howard, a lawyer for the world’s largest aircraft lessor AerCap, told the court that insurers had to know there was no realistic prospect that Western-owned jets and engines would be returned.

“The reality is … that the aircraft and engines are lost,” he said.

In one of the largest insurance disputes to be heard in London, AerCap, DAE, Merx Aviation, KDAC Aviation Finance and Falcon are pitched against insurers, including AIG, Lloyd’s, Chubb and Swiss Re.

The fast-tracked case, which is due to close by year-end, is seen as a bellwether for parallel lawsuits in Ireland and the US over who should pay for around 400 planes, valued at almost $10bn, left in Russia after the West imposed sanctions over the war.

The London lawsuit centres on claims related to almost 150 jets, along with some engines, that were originally valued at up to around $4.7bn. But some settlements with Russia – albeit at prices below the insured value – have trimmed the value to nearer $3bn.

Insurers argue, in part, that there is no evidence the aircraft have been destroyed or damaged, that the assets are no longer subject to lease agreements, or that policies do not cover the events leading up to their failure to return.

Lessors said in court filings they had sought compensation from Russia. DAE said its president, David Houlihan, took a one-week trip to Moscow in March 2022 to meet with lessees – to no avail, documents show.

Lessors claim compensation under “contingent and possessed” policies that can provide coverage under a broad, all-risks clause for loss or damage to aircraft or a more specific war-risks clause.

AerCap, which says it has lost 116 aircraft and 15 engines, is suing for $2.06bn under its all-risks insurance policy or, alternatively, $1.2bn under its capped war-risks policy, pending further deals with Russia, court filings show.

In court filings, DAE had valued its claim for 22 aircraft, one engine and one piece of equipment at $737.8m. Merx is claiming $184m for six aircraft, while Falcon is claiming $43.4m for two aircraft, and KDAC is suing for $21.5m over the loss of one jet, court filings show.

Lessors have separately taken on reinsurers, some of which lost a battle in March to have the case moved to Moscow, and some are also tackling insurers over jets stuck in Ukraine.

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