Russia Aircraft Insurance Claims: AerCap Bearish

Aircraft leasing giant AerCap remains pessimistic on insurance claims for planes lost in Russia as a result of the ongoing war in Ukraine.

In a conference call on financial results, the leasing giant’s CEO and executive director, Aengus Kelly, had the following to say about the status of 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 possible insurance settlements regarding some of our planes lost in Russia.”

“However, it is too early to know if anything will come of it and we have no further comment at this time.”

Insurance claims from AerCap… Photo credit: AerCap

Back in March 2022, it was announced that AerCap had filed a $3.5 billion insurance claim to cover the costs of planes that were stranded or stolen in Russia.

On that day, the company expects impairments of around 135 owned aircraft and 14 owned engines leased to Russian airlines, totaling around $3.1 billion in assets.

The company took back and removed around 22 aircraft from Russia, along with three engines, with a net worth of around $400 million.

When you add the two numbers together, you can understand why AerCap is filing a large insurance claim.

Will they get those planes back? Photo credit: AerCap

This question has been asked in recent weeks, especially in light of the Russian government’s nationalization of such leased aircraft.

Some Russian airlines like Pobeda have stuck to the West and returned some planes, but it’s a very small number compared to the 500-600+ planes leased in Russia.

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This is also why AerCap said what they said above. They’re probably unlikely to get those planes back, which is why the insurance claim was filed.

It will be interesting to see how this situation develops in the coming weeks and months.

From the perspective that settlements appear likely, expect them not to get the planes back.

Do insurers pay for that? Photo credit: AerCap.

Another important question to ask. Typically, insurance companies use conflicts like Ukraine as “force majeure” that exempts them from the obligation to pay.

Paying a $3.5 billion claim would damage insurance companies’ financial strength, especially in times of turbulence.

It is likely that these claims will be fought in court as insurers will likely do whatever they can to exonerate themselves.

However, they could pay off the claim in favor of the West, but that too is purely speculative at this point.

In any case, it is important to keep this in mind as it could set the precedent for further insurance claims from other insurers.

But now all eyes will be on the insurance companies to see what the final judgments will be, which we don’t know when will be finalized.