Aircraft lessor giant AerCap remains pessimistic about the insurance settlements of aircraft lost in Russia as a result of the ongoing war in Ukraine.
In a financial earnings call, Aengus Kelly, the CEO & Executive Director of the leasing giant, had this to say on the status of the insurance settlements:
“As you know, we are pursuing insurance claims against our own insurers and against the Russian airlines, insurers, and reinsurers.”
“We have been approached by some Russian airlines and their insurers about potential insurance settlements involving some of our aircraft lost in Russia.”
“However, it is too early to know whether anything will come out of it, and we have nothing further to say about it at this stage.”
Back in March 2022, it was announced that AerCap had filed a $3.5bn insurance claim to cover the cost of aircraft that are either stuck or stolen in Russia.
On that day, the company expects impairments of around 135 owned aircraft and 14 owned engines on lease to Russia airlines, which represented around $3.1bn in total assets.
The company has repossessed and removed around 22 aircraft from Russia as well as three engines, which have a net value of around $400 million.
Add the two figures together, and you can understand why AerCap is filing a large insurance claim.
It is a question that has been asked over the past couple of weeks, especially with the Russian government nationalizing such leased aircraft.
Some Russian carriers like Pobeda have been compliant with the West and have returned some aircraft, but it is a very small figure compared to the over 500-600 aircraft that are on lease in Russia.
This is also why AerCap said what they said above. It is probably unlikely they will get these aircraft back, hence why the insurance claim has been filed.
It will be interesting to see how this situation develops over the next few weeks and months.
With the perspective that settlements are looking like the likely thing, then it can be expected that they will not get the aircraft back.
Another important question that needs to be asked. Typically insurance companies use conflicts such as Ukraine as “an act of God”, which exempts them from having to payout.
Paying out a $3.5bn claim would damage the insurance companies’ financial standing, especially in times of turmoil already.
It will probably be likely that these claims will be fought in court, as the insurers will probably do all they can to get themselves out of it.
However, they could pay out the claim in support of the West, but again this is purely speculative at this point.
Either way, this is something to definitely keep an eye on, as it could set the precedent for further insurance claims by other insurers.
But for now, all eyes will be on the insurance companies to see what the final verdicts will be, of which we don’t know when this will be concluded.
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