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AerCap multi-billion dollar insurance claim

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The world’s largest aircraft leasing company, AerCap, has filed $3.5 billion in insurance claims after more than 100 of its planes were stranded in Russia following the widespread imposition of sanctions against that country. Before the sanctions, AerCap had 135 planes placed with Russian airlines. But so far, the lessor has only recovered 22.

AerCap CEO confirms insurance claims

On an investor call last week, AerCap chief executive Gus Kelly confirmed the filing of insurance claims. Aercap is just one of many lessors with aircraft stranded in Russia. In total, more than 400 leased planes remained stranded in the pariah country. Compounding the problem for lessors like Aercap, a new Russian law allows Russian airlines to re-register planes and keep flying them.

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AerCap is the world’s largest commercial aircraft owner and most active aircraft trader, with approximately 1,750 aircraft on its books. Backers say Russia’s new laws contravene international aviation agreements and equate to theft – and it’s sparking a chain of insurance claims.


Gus Kelly, CEO of AerCap

AerCap CEO Gus Kelly (pictured) says Russian airlines are now flying its planes illegally. Photo: AerCap

No guarantee that AerCap can recover its planes stranded in Russia

“Many of these planes are now flown illegally by our former airline customers,” Mr. Kelly said on the investor call. The CEO said around 5% of AerCap’s fleet by net book value is leased to Russian airlines and the lessor continues to try to repossess its planes, but there is no guarantee that will happen.


“AerCap intends to fully comply with all applicable sanctions, and we have ended the lease of all of our aircraft and engines to Russian airlines.“, AerCap said in a statement. “We continue to make efforts to repossess additional aircraft and engines from our former Russian airline customers, but it is unclear if we will be able to do so or what the condition of these assets will be. at the time of recovery.

“We expect to recognize an impairment on our assets in Russia that have not been returned to us as of the first quarter of 2022, although we have not determined the amount of any impairment.”


Airbus A320neo S7 Airlines

Unlike Aeroflot, S7 Airlines is a major customer of AerCap. Photo: Airbus

Aeroflot a small customer of AerCap

State-owned Aeroflot is Russia’s largest airline. Airline database planespotters.net reports 180 planes in Aeroflot’s fleet, correct as of April 3. A significant portion of these aircraft are marked as leased. Historically, Aeroflot has dealt with a wide range of lessors, but knowing who picked up which planes and when is tricky business. Most AerCap aircraft stranded in Russia are not with Aeroflot. Lessors most exposed to Aeroflot are GTLK State Transport Leasing, SB Leasing and SMBC Aviation Capital. Since GTLK is a Russian-based lessor, they probably won’t need to take back planes.


Aircraft leasing database ch-aviation.com reports that Aeroflot owns four Aercap aircraft worth nearly $92 million, including three A330-300s and one A320-200. A big Russian customer of AerCap is S7 Airlines, with 44 AerCap aircraft worth nearly $743 million. Ural Airlines, headquartered in Yekaterinburg, owns 20 AerCap narrow-body Airbuses worth nearly $350 million. Budget airline smartavia also has 11 planes from AerCap – a mix of narrow-body Airbuses and Boeings.

Lessors and their insurance companies are reportedly in talks over potential payouts. But like most insurance settlements, AerCap’s CEO doesn’t expect payouts to come easily or quickly.

Source: The Wall Street Journal


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