Dubai Aerospace Enterprise (DAE) reported receiving $201 mn in settlements over the past three months for aircraft previously leased to airline carriers in Russia. The company confirmed cash proceeds from selected insurance companies, resolving claims related to these aircraft.
DAE announced it has secured a cumulative $319 mn in cash proceeds, including a 2023 settlement involving seven aircraft.
Dubai Aerospace Enterprise (DAE) Ltd is a globally recognized aviation services corporation with two divisions: DAE Capital and DAE Engineering. Headquartered in Dubai, DAE serves over 170 airline customers in over 65 countries from its seven office locations in Dubai, Dublin, Amman, Singapore, Miami, New York, and Seattle.
The company stated it will continue litigation in English courts under its insurance policies and remains focused on mitigating losses associated with aircraft formerly leased to Russian airlines.
This development occurs amidst ongoing disputes involving over 40 aviation leasing companies, including DAE, seeking compensation for jets stranded in Russia.
Following sanctions by the US, UK, and EU due to Russia’s 2022 invasion of Ukraine, hundreds of aircraft and engines were left in Russia, prompting legal battles.
Other lessors have also announced settlements. Air Lease Corp. secured $64.9 mn related to JSC Siberia Airlines, while AerCap Holdings received a $572 mn cash insurance settlement involving JSC Ural Airlines and JSC Siberia Airlines.
GA Telesis resolved insurance claims for two Airbus single-aisle aircraft leased to Rossiya Airlines, part of Aeroflot Group.
AerCap Holdings later disclosed that it had collected $1.3 bn in insurance settlements during 2023. This included $614 mn in Q4 from four Russian airlines and insurers for 50 aircraft and five spare engines stranded due to the Ukraine War.
Resolving claims tied to stranded jets requires complex arbitration. Morningstar DBRS experts suggested the process could take years. DAE’s recent progress reflects the ongoing legal and financial recovery efforts across the aviation leasing industry.
The issue of blocked aircraft remaining in Russia after its invasion of Ukraine in 2022 has become one of the most significant crises in the aviation leasing industry. Following sanctions imposed by the US, EU, and UK to isolate Russia’s economy, hundreds of commercial aircraft owned by international leasing companies were stranded in Russia. Experts estimate that over 400 aircraft, valued at approximately $10 bn, remain trapped.
The Russian government passed legislation allowing domestic airlines to re-register these aircraft in the national registry, effectively nationalizing them.
This action violated international law and breached leasing agreements. The sanctions also prohibited Western lessors from engaging with Russian airlines, demanding the return of leased aircraft. However, this process was halted by Russian authorities.
Leasing companies such as Dubai Aerospace Enterprise, AerCap Holdings, Air Lease Corp., and GA Telesis turned to insurers to recover their losses. Insurers, facing immense financial risks and legal complications due to the war and sanctions, were slow to settle claims. Many lessors initiated legal proceedings in London to seek compensation under their insurance policies.
Experts highlight that resolving these disputes could take years due to complex arbitration processes, geopolitical tensions, and significant financial stakes.
Beyond the ongoing litigation, this issue underscores broader risks to the global aviation sector, demonstrating how political conflicts can jeopardize billions in investments.
The crisis has also exposed vulnerabilities in aviation insurance systems. Insurers and leasing companies are now reassessing risks associated with leasing aircraft to countries with high geopolitical instability. The goal is to avoid similar crises in the future and strengthen risk management practices within the industry.
This situation illustrates the far-reaching consequences of geopolitical conflict, not only for the aviation industry but for global financial systems. It also underscores the necessity for greater safeguards and the importance of clear legal frameworks in international leasing agreements.
