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Lessor DAE reaches settlement with Western insurer AXA

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Aircraft lessors sue over billions of dollars in unpaid

claims

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Five disputes against different insurers rolled into one

trial

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Hundreds of aircraft remain in Russia after Ukraine

invasion

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Trial marks start of one of biggest UK insurance battles

(Recasts with DAE, AXA settlement)

By Kirstin Ridley and Sam Tobin

LONDON, Oct 2 (Reuters) -

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 ( AER ), 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 ( AER ), 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

United States over who should pay for around 400 planes, valued

at almost $10 billion, 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 $4.7 billion. But some settlements with Russia -

albeit at prices below the insured value - have trimmed the

value to nearer $3.0 billion.

Insurers argue in part 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 are claiming compensation under "contingent and

possessed" policies that can provide cover under a broad,

all-risks clause for loss or damage to aircraft or under a more

specific war-risks clause.

AerCap ( AER ), which says it has lost 116 aircraft and 15 engines,

is suing for $2.06 billion under its all-risks insurance policy

or, alternatively, $1.2 billion 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 $737.8 million. Merx is

claiming $184 million for six aircraft, while Falcon is claiming

$43.4 million for two aircraft and KDAC is suing for $21.5

million 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.