Aviation Lessors Secure Settlements With Russia Totaling $2.5B for Trapped Planes

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Aircraft leasing firms have secured settlements with Russia totaling more than $2.5 billion for over a quarter of the roughly 400 aircraft stuck in the country since Moscow’s invasion of Ukraine in 2022.

In return, international lessors are handing ownership of the planes to state insurance company NSK, which will transfer them to Russian airlines.

NLK-Finance, a subsidiary of NSK, has been allocated 296.8 billion roubles ($3.31 billion) to date to buy out aircraft that have been the subject of a stand-off between international lessors and insurers, Russia’s finance ministry said this month.

The impact of these settlements on lawsuits launched by lessors against Western insurers was unclear, the heads of aircraft lessors DAE Capital and Aircastle Advisor told the Airline Economics conference in Dublin this week.

Lessors have been suing dozens of insurers over losses of at least $8 billion over the trapped planes, with vast court trials scheduled in Dublin in June and London in October. Some are also being heard in U.S. states.

In separate litigation, groups of lessors are trying to prevent reinsurance cases worth more than $4 billion from being heard in Moscow, a court filing shows.

Below are details of settlements reached to date between lessors and Russia.

AERCAP

Ireland-based AerCap, the world’s largest lessor, said last September it had received $645 million from NSK in a settlement over 17 jets and five spare engines leased to state-controlled airline Aeroflot and its subsidiary Rossiya.

In December, the lessor reached a second settlement worth over 47 aircraft and five spare engines leased to JSC Ural Airlines and JSC Siberia Airlines (S7).

AerCap has sued insurers such as AIG and Lloyd’s of London for $3.5 billion over the loss of 116 aircraft and 23 aircraft engines in London’s High Court under its all-risks policy.

AIRCASTLE ADVISOR

Aircastle said earlier this month it had received in a settlement relating to four aircraft formerly on lease to two Russian airlines.

Aircastle filed a claim in New York against more than 30 insurers in October 2022 over nine aircraft and other equipment stranded in Russia.

Aircastle said in 2022 it had booked $252 million in impairment losses for the jets.

AIR LEASE

Air Lease said in December it had received about $64.9 million in cash as part of an insurance claim settlement for four Airbus jets it had leased to S7 Airlines. The settlement does not include five other aircraft previously leased to S7.

BOC AVIATION

BOC Aviation said in November it had received $208 million under an insurance settlement for eight aircraft stuck in Russia. Singapore-based BOC recognized an $804 million asset write-down in August 2022 relating to 17 aircraft in Russia. BOC is suing insurers through courts in Dublin.

CDB AVIATION

Irish-based lessor CDB Aviation, owned by the China Development Bank, said in October it had settled for 1.417 billion yuan ($197.50 million) over four planes and in December said it had settled for 145 million yuan for one plane.

CDB Aviation recognized a 747 million yuan asset write-down in August 2022 but said this was not the full value of the jets. CDB is pursuing a claim against insurers in Dublin.

DUBAI AEROSPACE

Dubai Aerospace Enterprise said in December it had received a cash settlement totaling around $118 million for seven aircraft previously leased to Aeroflot.

It wrote off almost $600 million for 19 aircraft stuck in Russia in 2022. DAE and its subsidiary Falcon are suing 11 insurers for $900 million in London over 21 aircraft and equipment.

GA TELESIS

GA Telesis said in December it received an insurance settlement for two planes previously leased to Rossiya. It did not provide financial details.

SMBC AVIATION CAPITAL

Irish-headquartered SMBC, owned by a consortium including Japan’s Sumitomo Corp and Sumitomo Mitsui Financial Group, said in October it had received a settlement of $710 million for 16 aircraft and their engines previously leased to Aeroflot.

SMBC recorded an impairment of $1.6 billion in 2022 to cover the full financial impact of having 34 jets stuck in Russia. It is suing insurers in Dublin.

($1 = 89.5650 roubles)

($1 = 7.1746 Chinese yuan renminbi)

(Compiled by Carolyn Cohn, Kirstin Ridley and Gleb Stolyarov; editing by Mark Potter)

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