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Aircraft rentals that see “horrible” increases in insurance costs



(Reuters) – The likely huge insurance claims related to the termination of aircraft leasing agreements in Russia are already leading to “terrible” increases in the cost of renewing the insurance, said the CEO of the large lessor BOC Aviation Ltd.

More than 400 leased aircraft worth almost $ 10 billion remained in Russia after a deadline of March 28 to terminate the contracts in line with Western sanctions against the war in Ukraine, leaving the landlord facing large potential write-downs or a long insurance battle.

In a trade update on Thursday, BOC said the net book value of the 17 owned aircraft it was recovering from Russia – after deducting all cash collateral held for the aircraft ̵

1; was $ 589 million or 2.5% of its total assets.

All letters of credit held for the aircraft had been successfully drawn, it added.

“As there will be huge demands on these insurances this year for confiscation or theft if the aircraft are not returned, this will have a contagious effect on insurance costs,” said BOC CEO Robert Martin at an aviation conference.

“This is one of the unforeseen circumstances that will befall us later this year, and I hear some terrible figures for some of the short-term renewals that will take place at the end of March. Fortunately, we are not leaving until January next year. ”

The world’s leading aircraft rental company, AerCap, said last week that it had filed a $ 3.5 billion insurance claim for more than 100 jets stranded in Russia, the industry’s largest exposure.

Martin said that the consequences of the upcoming battle could force the aviation industry to completely reconsider how it makes insurance and that it is not healthy to have too much concentrated in a single market.

Martin said that the BOC had taken out “some” aircraft that they manage from Russia. The Singapore-based landlord said on Thursday that a handled aircraft remains in Russia, as do the 17 they own.

“We will continue to gradually take out the other aircraft. The only way is through negotiation, there is no magic wand, and I feel sorry for our Russian customers, they have been put in this situation not because of anything they have done.” , he said.

“What is not resolved will end up in an insurance claim.”


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