May 20, 2024 - Business

Carlyle's planes are stuck in Russia, and it wants insurers to pay up

an illustration of a plane wrapped in white, blue and tape that forms the stripes of the russian flag

Illustration: Tiffany Herring/Axios

The Carlyle Group's aviation fund had 23 commercial planes leased out in Russia when the country invaded Ukraine in February 2022.

The latest: The planes, a mix of Boeing and Airbus aircraft valued at over $700 million, remain stuck inside of Russia, effectively seized by the government.

  • Carlyle has been unable to either get them back or get their insurance claims paid out, despite having "all-risk" and "war-risk" policies.

Driving the news: Carlyle earlier this month sent certified letters to several U.S. congressional leaders, asking for an investigation into reserves practices of aviation insurers and reinsurers.

  • It argues that the industry definitely has transparency issues and may have solvency issues, the latter of which could explain why its claims haven't been honored.

The big picture: This dispute goes far beyond just Carlyle, or the related lawsuit it filed in Florida 18 months ago.

  • There are more than 200 jets in similar straits, which has sparked a wave of litigation.
  • This includes a monster U.K. case brought by Carlyle and other lessors like Ireland's AerCap, which covers an estimated $10 billion of assets.
  • Many of the defendants sought to have it tried in Moscow, but London's High Court instead ruled that it will hear the case next spring.

Zoom out: No one in Congress has yet replied to Carlyle's letter.

  • Carlyle acquired the aviation finance business from Apollo in 2018, but this is the first claim it's made for lost aircraft under war-risk insurance policies.

The bottom line: The global commercial aircraft leasing business is estimated to be worth more than $150 billion, but its future business model will be impacted by how the Russia situation gets resolved.

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