Aircraft lessor Avolon is taking court action against insurers over claims against losses from aircraft seized by Russian airlines following the country’s invasion of Ukraine.
Dublin-based Avolon lost $261 million (€268 million) when Russian carriers kept 10 of its aircraft in the country after it invaded its neighbour in February.
High Court listings show that one of the Irish company’s subsidiaries, Avolon Aerospace [Hamilton] AOE 1 Ltd, has begun legal action against Lloyds Insurance Company.
Earlier this year Avolon said it believed it had valid insurance claims over the lost aircraft and would follow these up with its underwriters.
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“We have always maintained that we will rigorously pursue our claim and issuing proceedings now is the next stage in that process,” Avolon said when contacted on Thursday.
“We are not in a position to comment any further on any ongoing litigation but we are naturally taking all necessary steps to protect our position,” it added.
[ Russian losses cost SMBC almost €1.6bnOpens in new window ]
The company did not confirm that the proceedings related to the aircraft lost to Russia, but it is understood that this is case. The action is against a syndicate of insurers, led by Lloyds.
Avolon has filed a plenary summons with the High Court, the first formal step in taking legal action. The list indicates that the company did so earlier this week.
The document does not say how much Avolon is seeking from its insurers, but outlines the aircraft and equipment involved in the case.
Avolon ended leases with Russian airlines to comply with EU sanctions against the country following its invasion of Ukraine.
The lessor had supplied 14 aircraft to Russian carriers but was able to recover four of them shortly after the war began.
Its accounts for the first three months of the year showed the loss of the other 10 cost it a total of $304 million.
However, Avolon offset this against other balances associated with the leases, leaving it with a net loss of $261 million.
A Lloyds spokesman said the company did not comment on ongoing litigation or specific policies.
Avolon believed the Russian airlines continued using the aircraft after the company terminated the leases and they had stopped paying for them.
[ Ten Avolon aircraft still grounded in Russia after lease terminationsOpens in new window ]
Dómhnall Slattery, the company’s former chief executive, subsequently said that Avolon regarded the planes as “stolen”.
Vitaliy Seveliev, Russia’s transport minister, recently said 1,140 planes were newly registered in the country following a decree authorising the seizure of foreign-owned aircraft.
Irish aircraft lessors were among the first businesses caught up in the fallout from the conflict sparked by Russia’s invasion of Ukraine.
Another Dublin-based lessor, Aercap, last month filed claims in the British courts against two groups of insurers, one led by Lloyds, the other by US giant AIG.
Reports said the Dublin-based company was seeking up to $3.5 billion for 116 aircraft and 23 engines that it was unable to recover after the war broke out.
The insurers have filed defences contesting Aercap’s claim. They argue among other points that Russia’s seizure of the aircraft does not constitute a loss for insurance purposes.
An initial case management hearing is likely in that action at some point next year, but a full trial and verdict are unlikely before 2024.
Avolon’s Irish lawsuit is at an earlier stage of the process than the action Aercap has begun in Britain.
The Irish companies’ claims are among the first of what observers believe will be a wave of legal actions taken by lessors against insurers to recover losses stemming from the Ukraine war.
The EU is shortly due to review the effectiveness of its current sanctions against Russia.
