Peregrine Aviation Bravo Limited & Ors v Laudamotion GmbH & Anor

Contractual insolvency clauses which refer to suspending payment ordinarily concern a general suspension, or suspension of a category of payments, indicating financial difficulty and a risk of insolvency or curtailment of creditors’ rights. They do not ordinarily cover a threat not to pay particular contingent contractual sums, especially where the liability is disputed.

Where an aircraft lease requires consultation and reasonable notice before fixing a delivery date, those requirements are preconditions to a valid tender. A lessee’s disengagement from the delivery process does not remove its contractual right to notice and consultation. A lessee may refuse delivery where it demonstrates a material deviation from the contractual delivery condition, but the deviation must be identified sufficiently clearly to allow the lessor to cure it.

The claimants, members of the AerCap group, leased four Airbus A320 aircraft to Laudamotion under 2019 leases. Ryanair guaranteed some of Laudamotion’s obligations. During the early Covid-19 pandemic, Laudamotion sought to defer delivery, reduce rent and avoid taking the undelivered aircraft.

The claimants alleged that Laudamotion’s correspondence created Events of Default, that it wrongfully refused delivery of MSN 3361 on 7 May 2020, and that cross-defaults entitled them to terminate the remaining leases and recover loss. The central issues concerned the construction of Article 24.2(n), the requirements for fixing a Scheduled Delivery Date under Article 3.2, and the effect of missing delivery documents under Article 6.2 and Exhibit B.

1. Claim dismissed. Laudamotion did not wrongfully fail to take delivery of MSN 3361. No Event of Default occurred, and the claimants were not entitled to terminate any of the leases.
2. Article 24.2(n) was construed in its contractual context. It required a clear and unequivocal actual or threatened general suspension of payments, or suspension affecting at least a category of debts, indicating financial difficulty and a risk of insolvency or other curtailment of creditors’ rights. The debts had to be existing rather than merely contingent and not genuinely disputed on substantial grounds. The letters of 18 March and 20 April 2020 did not satisfy that standard. They concerned particular leases or contingent future rent, were equivocal, and were part of proposed commercial negotiations. The claimants’ subsequent conduct also affirmed the leases: paras [141]-[163].
3. In any event, the claimants’ termination notices did not establish that the leases were terminated by reason of an Article 24.2(n) Event of Default. Following Loefelis v Lonsdale Sports, a claim for loss or expenses arising from repudiatory breach requires a causal chain connecting the breach with the termination: paras [164]-[187].
4. Article 3.2 required consultation, timely notification and reasonable notice before the lessor fixed the exact delivery date. Compliance was a precondition to a valid tender. The 7 May tender was invalid because the proposed date came unexpectedly after a prolonged absence of notification and consultation and gave Laudamotion virtually no real time to assess the aircraft: paras [193]-[198].
5. The absence of the ECoA, CAT.IDE statement and EASA compliance letter was a Material Deviation under Exhibit B § 4 and Article 6.2. The documents had to be available at or before tender, and their subsequent availability did not cure the defect because they were never provided before termination. Laudamotion sufficiently demonstrated this particular deviation in its letter of 7 May: paras [212]-[236].
6. Article 6.2 required sufficiently specific identification of other alleged Material Deviations so that the lessor could assess and cure them. General reliance on an outdated open-items list was insufficient. The other alleged defects therefore could not justify refusal of delivery: paras [225]-[236], [252]-[293].
7. Article 3.3 did not require the lessor to secure redelivery from the prior lessee by a particular date. Peregrine was able to lease MSN 3361 to Laudamotion because it could terminate the Flynas lease immediately if delivery had proceeded: paras [237]-[243].
8. The aircraft’s preparation for storage did not make it unairworthy. Airworthiness had to be assessed by reference to the applicable aviation regulatory regime, and storage was itself required by that regime: paras [244]-[251].
9. The alternative claims concerning cross-defaults, the ability to deliver the remaining aircraft, quantum and Ryanair’s guarantee liability were considered but did not arise. The court would not have found that the remaining aircraft could and would have been delivered by their Final Delivery Dates, and losses under other leases did not arise directly from an Event of Default under the MSN 3361 lease: paras [299]-[337], [413]-[423].

First-instance decision. No appellate history was stated in the judgment.