(Reuters) – Aercap, the world’s largest aircraft lender has filed a $3.5B insurance claim to cover more than 100 Russian jets that were left in Russia after Ukraine invaded. This sets up a long legal battle between insurers and lessors.
Aercap in Dublin, which was responsible for 5% value of its fleet when sanctions by the European Union forced termination of Russian leases.
It is not only expected that it will be the largest insurance claim among the lessors seeking to compensate for hundreds of aircrafts in Russia worth up to $10billion, but also the most significant single claim ever filed.
Following the release of financial results in the last three months of 2020, Chief Financial Officer Peter Judas informed investors that he had submitted an insurance claim of approximately $3.5B for our engines and aircraft remaining in Russia.
He said, “In this instance we expect them to be litigated, given the large amounts involved in the industry.”
The European Union imposed sanctions on Russia’s lessors and they had to terminate their Russian-related rental contracts by Monday.
Analysts say that because of the size and unprecedented nature of possible losses, it will probably lead to years of litigation among lessors as well as insurers before decisions about payouts are made.
According to one industry expert, there will be a fierce battle between insurance and leasing companies.
Aercap indicated that they may experience an impairment during the first quarter. However, it was not yet certain how large. Judas estimated Aercap’s net Russia exposure at around $2.5 billion.
Aercap had 135 aircraft, 14 engines and 13 engines under lease to Russia. However, Aercap has repossessed and taken out 22 aircraft as well as three engines in its financial results for quarter four of this year.
The shares of the company were lower than expected at 1415 GMT and 18% less since the beginning.
Aercap is the biggest aircraft lesor worldwide after it acquired rival GECAS last year. It had 3,701 aircraft and engines on its books by December end, it stated.
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By Mike Robinson
