In a high-stakes legal showdown playing out in Dublin, global aircraft lessors are battling major insurance companies over compensation for €2.5 billion worth of aircraft stranded in Russia. The litigation, which has been ongoing since June 2024, is part of a broader series of disputes across Europe, including a parallel case in London. The outcome could redefine liability norms in the aviation industry.
The issue stems from the stranding of about 400 planes in Russia after Western sanctions required lessors to terminate contracts with Russian airlines by March 2022. Initially, lessors demanded the return of their assets, but Moscow refused, re-registering many planes for Russian airlines without the owners’ consent. Unable to reclaim their aircraft, lessors invoked war risk insurance clauses to recover losses.
Among the lessors involved are industry giants Avolon, SMBC, BOC Aviation, and Hermes Aircraft. Dublin, the epicenter of the global aircraft leasing industry, has become a key battleground, as over 60% of the world’s leased aircraft are owned or managed in Ireland.
The Dublin case involves claims against insurers including Lloyd’s, AIG, and Chubb, with 180 lawyers engaged in what is expected to be a months-long trial. Legal fees alone could amount to hundreds of millions of euros. Witnesses, including technical managers from lessors like BOC Aviation, have detailed frantic efforts in early 2022 to extract planes from Russia, often seeking parking space in “Russia-friendly” countries like Turkey.
The world’s largest lessor, Aercap, is pursuing a related case in London over 116 aircraft and 23 engines, initially valued at $3.5 billion. While Aercap has reached out-of-court settlements worth $1.3 billion, it continues to seek further compensation. Similarly, in Dublin, SMBC recently settled with Swiss Re, though many claims remain unresolved.
The sanctions have profoundly impacted Russia's aviation industry. Passenger numbers to Europe have plummeted from nearly 10 million in 2019 to a few hundred thousand. International travel has shifted to countries that have not imposed sanctions, including Turkey, the UAE, and China.
To address the void left by Western aircraft, the Kremlin announced an ambitious plan in 2022 to manufacture over 1,000 planes domestically by 2030. However, sanctions have restricted access to critical parts, casting doubt on Russia's ability to meet these goals. Reports suggest the target may be revised downward, as consultants argue demand for such a large fleet may not exist.
