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Aercap says potential Russian losses are “manageable”



(Reuters) – The world’s largest aircraft rental company, Aercap, said on Wednesday that it was still calculating the $ 3.3 billion write-down fee it would have to lease to Russia, but said it would be “manageable”.

Until Monday, landlords had to terminate the current lease in Russia under sanctions imposed by the European Union after Moscow’s invasion of Ukraine, which means that they face major potential write-downs or a long insurance dispute.

The Dublin-based lessor, which had 5% of its fleet of book net worth leased in Russia at the end of 2021, had the largest exposure of any lessor to Russia when the sanctions were imposed.

“We expect to report a write-down of our assets in Russia that have not been returned to us as early as the first quarter of 2022, although we have not determined the size of any write-down,”

; Aercap said in a statement on its results for the company. last three months 2021.

Aercap had 135 owned aircraft and 14 owned engines leased to Russia with a net book value of approximately $ 3.1 billion. It has since taken back and removed 22 aircraft and three engines, with a net worth of about $ 400 million, it says.

The company also has letters of credit related to aircraft and engines leased in Russia worth approximately $ 260 million, of which it has so far received approximately $ 175 million.

Although most leased aircraft are insured, the unmatched nature and extent of the potential losses are likely to involve years of litigation between lessors and insurance companies before any decisions on payments are made, analysts say.

Rival Avolon’s CEO said on Tuesday that Russian airlines could be frozen out of the aircraft leasing market far beyond the Ukraine conflict, which would shut down what had been a strong market for the sector.

Aercap, by far the largest aircraft rental company in the world after the acquisition of rival GECAS last year, had 3,701 aircraft, engines and helicopters on its books at the end of last year.

It earned a net income for 2021 of $ 1.001 billion and said that the aviation industry’s rapid recovery after easing COVID-19 restrictions put it “on a positive path towards 2022.”


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