AerCap Holdings: Largest aircraft owner lost 113 planes to Russia due to sanctions

Seizures of the planes and 11 jet engines by Russian authorities caused AerCap to take a pre-tax charge of $2.7 billion in the quarter, leading the company to report a net loss of $2 billion in the quarter. instead of the 500 million profits it would have made without the success. But company executives said the quarter was actually a good one and they see better days ahead as global flight demand continues to recover from the Covid pandemic.

“But for the Russia impact, this is a strong underlying quarter for the company,” CEO Aengus Kelly said in comments to analysts. “Across all of our businesses…we are seeing improved demand, increased utilization of our assets and improved financial health for our customers.”

Investors accepted and Dublin shares AerCap (ARE) gained 6% in afternoon trading after the report.

The company was able to recover 22 jets and 3 engines before they were seized by Russian authorities. He has filed insurance claims to seek recovery of the lost plane, although some of those claims relate to Russian insurance companies. These policies are backed by Western reinsurance companies, but AerCap said “the timing and amount of any recovery under these policies is uncertain.”

The company owns a total of 1,624 aircraft, far more than any single airline owned or operated. The planes lost to Russia represented less than 5% of the net worth of Aercap’s fleet, which grew during the pandemic by buying rival leasing company GECAS from General Electric (GE).

Aercap should easily overcome the financial loss from the jets, said Richard Aboulafia, managing director of AeroDynamic Advisory. Even if the war ended and sanctions were lifted, the planes would have lost their operating certificates in the eyes of Western aviation regulators.

“Once the documentation is gone, there’s no point even trying to get them back,” he said.

When Russia invaded Ukraine on February 24, Russian air carriers operated 861 commercial aircraft, according to data from aviation analysis firm Cirium. Just over half of these planes, with an estimated market value of $9.2 billion, belonged to non-Russian leasing companies.
Sanctions imposed by several countries have forced the international aircraft leasing companies that own the planes to take them back by the end of March. An estimated 79 jets were taken over, but Russia has announced it is nationalizing hundreds more.

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