Two Irish units of aircraft lessor Aircastle have launched a near US$25 million claim against Unicredit in London to enforce letters of credit (L/Cs) related to aircraft seized by the Russian government, the Irish Independent newspaper has reported.

This is one of the latest moves by the aircraft leasing sector as lessors seek to recover up to US$10 billion in L/C and insurance claims after their planes were seized by Moscow following Russia's invasion of Ukraine.

The world's biggest aircraft lessor, Aercap, has already said it is pursuing a US$45.8 million claim against Unicredit after the Italian bank rejected its payment requests in respect of certain L/Cs related to failed lease agreements with lessees in Russia (DC World News, 22 April 2022).

Some L/Cs settled

Aircastle says it had L/Cs of US$49.5 million related to its aircraft leased to Russian airlines in February after Moscow seized all foreign-owned aircraft.

The lessor has presented requests for payment to the various financial institutions and, by 25 April, had received US$25.4 million. Aircastle says it will continue to work with other financial institutions toward receiving payments on the remaining L/Cs, but intends to pursue all available legal claims if required.

Protracted lawsuits

Aircastle admits the amount of any payments under its remaining L/Cs are uncertain while analysts say lawsuits involving lessors, banks and insurance companies are likely to carry on for years.

More than 400 foreign-leased planes valued at around US$10 billion were seized by Moscow following the invasion of Ukraine, leading the aircraft lessors into disputes over the validity not only of L/C guarantees but also insurance claims.

Legal engagements

The world's oldest insurance marketplace, Lloyd's of London has reportedly hired global law firm Clyde & Co to investigate whether insurance claims made by aircraft lessors can be denied.

Aercap meanwhile has reportedly hired Clifford Chance as counsel to negotiate on claims worth US$3.5 billion.

The Irish Independent article, Aircastle becomes latest aircraft lessor to sue Unicredit over Russia, can be obtained on subscription here.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.