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Valuation row dominates legal battle between Alpstream and General Electric aircraft leasing firm in High Court case of alleged rigged auction


The London High Court battle between an airline backed by media owner Alexander Lebedev and General Electric, the world’s biggest aeroplane lease business, saw scorn poured on the allegedly low-ball lease valuations set by GE in a disputed plane sale.

GE was selling seven planes owned by Alpstream, a company backed by Mr Lebedev, whose son Evgeny owns The Independent newspaper, after foreclosing on a mortgage it had provided the Swiss-based firm.

Alpstream claims GE deliberately undervalued the planes during what it claims was a rigged auction in which one division of GE sold the planes to another – claims GE vigorously denies.

GE subsequently sold the planes on to Jet Blue, a fast-growing US airline.

The way GE came to its valuation of the planes is a key arguing point in the legal row and both sides have provided expert witnesses on the value of the leases. Alpstream’s legal team attacked GE’s lease rate expert witness, Ken De Jaeger.

Under cross examination last week, Mr De Jaeger admitted that his report on the lease value of the aircraft was based on examples of other sales supplied by GE or its legal team, rather than from a wider pool of hard examples.

“Then you can’t claim to be independent, can you?", said Alpstream QC Charles Béar.

“I am independent," insisted Mr De Jaeger, claiming he had considered other lease deals when making his valuation.

Mr Béar went on to claim that, although the market for aeroplanes was tough in 2010, at the time of the auction, the Alpstream planes were in unusually good condition and were relatively new compared to other planes on the market. There were especially limited numbers of planes like Alpstream’s, which were suitable for Jet Blue’s exacting requirements, he said.

That meant the broader value for other Airbuses on the market at the time, on which Mr De Jaeger based his valuation, were not relevant, Mr Béar said.

Mr De Jaeger denied this, stating: “In my opinion, you know, they are still affected by the market."

GE’s legal team accused Alpstream’s expert witness, Oliver Stuart-Menteth, of not basing his higher valuation on a wide enough number of sources.

He also came under attack when he hesitated to admit that the aviation market at the time was in the doldrums, putting a downward effect on lease valuations.

Stephen  Moriarty, QC for General Electric’s GECAS plane leasing division, said: “Your job is not to try and think of ways you can defend the claimant's case about values, your job is to give an honest opinion."

Mr Stuart-Menteth replied: “I think values were soft."

However, he denied that the common view in the industry at the time was that the plane leasing market would continue worsening, saying that, in fact, it was expected to improve at the time the planes were being marketed.

The case continues.