Dublin-based AerCap Holdings NV AER.N, the world's top aircraft lessor, has said that it would cease all its leasing activities to Russian airlines and disclosed a charge primarily related to its aircraft and engines that remain in Russia.
During the first quarter of 2022, AerCap said that it recognised a pretax charge of $2.7 billion, comprising flight equipment write-offs and impairments.
Lessor AerCap Books $2.7bn Charge On Stranded Russian Jets
The above news was followed by news that the world's top aircraft lessor, AerCap AER.N, has said that it booked a pretax charge of $2.7 billion in the first quarter as it recognised a loss on its more than 100 jets that remain stranded in Russia.
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AerCap is the latest leasing company to take an immediate hit on its Russian exposure, something the firms had previously been expected to defer until they had more clarity over the amount that could be reclaimed from insurers.
But with lessors and insurers gearing up for an historic battle over record potential claims worth an estimated $10 billion, industry executives said some lessors had been advised by lawyers to take writedowns as soon as possible to buttress claims that could drag through the courts for years.
Dublin-based AerCap had the largest exposure of any lessor, accounting for 5% of its fleet by value. It submitted a $3.5 billion insurance claim in March and said on Tuesday 17 May that it had not recognised any receivables relating to the claims.
"We have filed insurance claims related to these assets and will vigorously pursue all available remedies to recover our losses," AerCap chief executive officer Aengus Kelly said in a statement, describing the Russian hit as an undoubted setback, but a manageable one.
Over 400 leased planes worth almost $10 billion remained in Russia after a March 28 deadline to cancel the contracts in line with western sanctions over the war in Ukraine.
AerCap's charge comprised of an impairment loss and complete write off of flight equipment that remains in Russia. It removed 22 aircraft and three engines that were based outside of Russia when the sanctions were announced, but has 113 aircraft and 11 engines still stuck in the country.
The charge was partially offset by $210 million in payments from letters of credit related to the Russian-based assets. AerCap said it had initiated legal proceedings against one financial institution which rejected its payment demands.
First Quarter Net Income And Travel Demand
AerCap said that excluding the charge, its first quarter net income was $540 million and Kelly said that he expected to see demand for travel continue to grow as a broad-based recovery progresses.