AerCap has posted a $2bn net loss in the first three months of 2022 as more than 100 of its jets remain stranded in Russia following the invasion of Ukraine.
The world’s largest aircraft lessor said today that after sanctions were imposed on Moscow by the West, 113 of its jets and 11 engines remained in Russia and were appropriated by Russian airlines as retaliation.
As a result, AerCap posted a $2.7bn pre-tax charge, which included flight equipment write-offs and impairments.
“During the first quarter, we ceased all of our leasing activity to Russian airlines and took a charge primarily related to our aircraft and engines that remain in Russia,” chief executive Aengus Kelly said in a statement.
“We have filed insurance claims related to these assets and will vigorously pursue all available remedies to recover our losses.”
AerCap added that, after filing letters of credit related to the missing aircraft, it received insurance payments worth of $210m.
The results come less than two months after the company filed a $3.5bn claim to cover the total cost of the stranded jets.
“We have submitted an insurance claim for approximately $3.5 billion with respect to all aircraft and engines remaining in Russia and intend to pursue all of our claims under these policies with respect to our assets leased to Russian airlines as of 24 February 24, 2022,” read the statement.
“However, the timing and amount of any recoveries under these policies are uncertain and we have not recognised any claim receivables as of March 31, 2022.”
Following the invasion of Ukraine, more than 400 foreign-leased planes worth $10bn remained in Russia, leading to potential year-long legal battles between lessors and insurers over who would pay the bill.
Earlier this month, insurance powerhouse Lloyd’s of London hired global law firm Clyde & Co to investigate whether lessors’ claims are legally valid, while AerCap hired Clifford Chance as counsel.
“[This will] lead to a generation of insurance litigation and arbitration as various hands are forced,” said Withers’ global head of asset finance Paul Jebely.
“Resolving insurance coverage disputes requires a sound commercial approach to the parties’ positions, and that frankly is lacking at the moment, on both sides.”