Ruling Addresses Trio of 747-8s Stuck in Russia
On Tuesday, 11 April 2023, a U.S. judge ordered AirBridgeCargo Airlines LLC—Russia’s largest cargo air-carrier—and its parent company, Volga-Dnepr Logistics BV to pay aircraft lessor BOC Aviation Ltd. $406-million after the former were declared in default on the leases of three Boeing 747-8 freighters.
Following a one-day non-jury trial, U.S. District Judge Lewis Liman found in favor of BOC Aviation despite the defendant companies’ inability to operate the leased 747s following Russia’s February 2022 move against Ukraine and subsequent international sanctions which prohibited Western aircraft OEMs and lessors from delivering aircraft, aircraft parts, or aircraft technical support to Russian airlines and private owners of Western aircraft.
Lawyers for AirBridgeCargo Airlines LLC and Volga-Dnepr Logistics BV have yet to comment on the ruling.
Aircraft lessors have sued multiple insurers and lessees, primarily in European courts, for billions of dollars over hundreds of Western aircraft mired in Russia since the commencement of the Russo-Ukrainian conflict.
BOC Aviation alleged AirBridgeCargo went into default subsequent to its inability to maintain required reinsurance coverage. The company set forth it has thus far recovered one of the leased 747-8s and two of its four engines. The remaining engines and the two additional 747 freighters remain in Russia, however.
BOC Aviation’s majority shareholder is Bank of China Ltd.
In his 57-page decision, Judge Liman ruled BOC Aviation had proved the Russian government had “effected a seizure” of the disputed aircraft and engines by purposefully precluding their use outside Russia, “save, perhaps, to areas in Ukraine of for the purposes of the war.”
The judge opined that AirBridgeCargo Airlines’ willful operation of the trio of 747-8s strictly within the borders Russia and Ukraine had undermined BOC Aviation’s ability to carry out its right to reclaim possession of subject aircraft.
Liman rejected AirBridgeCargo's defense which contended neither side could have foreseen a default and cited the impossibility of grounding the 747-8s outside Russia insomuch as Moscow had specifically ordered them returned to Russian soil.
Similar arguments have been made in other cases, but a prevailing lack of standardized terms and the jet industry’s tradition of contractual secrecy have hampered aircraft lessors’ attempts to pool their claims into a singular class action suit.
Parties interested in reading further on the BOC Aviation Ltd vs AirBridgeCargo Airlines case should reference: BOC Aviation Ltd vs AirBridgeCargo Airlines LLC et al, U.S. District Court, Southern District of New York, No. 22-02070.
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