AerCap, an Irish aircraft leasing business, has filed a $3.5 billion insurance claim after more than 100 of its planes were stuck in Russia during the invasion of Ukraine.
AerCap’s chief financial officer (CFO) Peter Juhas acknowledged in an official statement dated March 30, 2022 that the corporation has filed an insurance claim for $3.5 billion. A total of 135 planes and 14 engines were leased to Russia by AerCap, however only 22 planes and three engines were returned.
“We’ve issued termination notices in respect of all of our aircraft and engines leased to Russian Airlines, and we’ve taken aggressive steps to recover our assets. The net carrying value of the assets that we’ve removed to date is approximately $400 million, and we are currently assessing the condition of these aircraft,” Juhas said.
“We have approximately $260 million of letters of credit related to our Russian assets that are not on our balance sheet,” he added.
As a result of international sanctions imposed on Russia in the aftermath of its invasion of Ukraine, AerCap was compelled to suspend various lease contracts with the country.
Lease agreements with Russia accounted for about 5% of AerCap’s fleet worth prior to the sanctions. According to Aengus Kelly, the company’s CEO, the possible losses are extraordinary.
“Let me add that our lessees are required to provide insurance coverage with respect to leased aircraft, and we are insured under those policies in the event of a total loss of an aircraft. We also purchased insurance, which provides us with coverage when our aircraft or engines are not subject to a lease or where they are subject to a lease, but a lessee’s policy fails to indemnify us,” Kelly explained.
“We intend to vigorously pursue all of our claims under these policies with respect to our assets leased to Russian Airlines as well as all other legal remedies that may be available to us,” he continued.
“We plan to pursue all other avenues for the recovery of value of our assets, including other legal claims available to us,” said Juhas, before adding that it is uncertain whether these efforts will be successful.
former airline customers. We expect to recognize an impairment on the aircraft and engines that remain in Russia, which may occur as early as the first quarter of 2022.”
“We’ll also need to review for impairment the assets that we’ve removed from Russia,” Juhas added.