Aercap lodges $3.5bn claim for planes seized in Russia

Dublin — Aercap, the world’s top aircraft lessor, has submitted a $3.5bn insurance claim for more than 100 jets stuck in Russia following its invasion of Ukraine, setting the stage for a lengthy legal wrangle between lessors and insurers.

Dublin-based Aercap had the largest exposure of any lessor when EU sanctions forced the termination of Russian leases, accounting for 5% of its fleet by value.

Not only is its insurance claim expected to be the biggest among lessors seeking compensation for the hundreds of planes worth up to $10bn, which remain in Russia, it is also one of the largest single claims ever submitted.

“Last week we submitted an insurance claim for approximately $3.5bn with respect to our aircraft and engines remaining in Russia,” CFO Peter Judas told investors following the publication of financial results for the final three months of 2021.

“In this case we expect them to be contested, just given the large sums involved across the industry,” he added.

Lessors had until Monday to wind up current rental contracts in Russia under sanctions imposed by the EU.

Analysts have said that the unprecedented nature and scale of the potential losses will probably mean years of litigation between lessors and insurers before any decisions on payouts are taken.

One industry executive predicted an “ugly battle” between the leasing and insurance companies.

Aercap said it may book an impairment in the first quarter of its financial year but it had not yet determined how big that might be. Judas estimated Aercap’s net Russia exposure at about $2.5bn.

Aercap had 135 aircraft and 14 engines on lease to Russia but had repossessed and removed 22 aircraft and three engines, it said in its financial results for the fourth quarter of the year.

Its shares were 4% lower at 2.15pm GMT, and down 18% since the start of 2021.

Aercap, by far the largest aircraft lessor in the world after its acquisition in 2021 of rival GECAS, had 3,701 aircraft, engines and helicopters on its books at the end of December, it said. 

Reuters