AerCap reaches landmark agreement with insurers over stranded Aeroflot jets

As the conflict between Russia and Ukraine continues, Irish aircraft lessor AerCap has reached an agreement with insurers over 17 jets it has on lease to Aeroflot and which are presently stranded in Russia. Currently there are over 400 Western aircraft in Russia as a consequence of the invasion of Ukraine.

AerCap has confirmed it has received US$645 million from NSK, the Russian state-owned insurer, in full settlement for the claims in relation to the 17 aircraft together with five spare engines which are on lease to either the state-owned carrier or its subsidiary, Rossiya.

The aircraft in question will now become the property of NSK.

“We have released our claims against NSK, Aeroflot, Rossiya and their international reinsurers with respect to these aircraft and engines,” said AerCap.

“AerCap has terminated its claims against Russian parties both under insurance policies issued by Russian insurance companies and under leasing agreements,” Aeroflot said, adding that it is in talks with other lessors about settling claims.

According to Reuters news agency, AerCap filed a US$3.5 billion London lawsuit last year against AIG and Lloyd’s over 141 aircraft and 29 aircraft engines it owned that were on lease to Russian airlines. A number of smaller lessors also have jets stuck in Russia, including SMBC Aviation Capital, which had 34.

AerCap said the amount of its claim against its all-risks insurers under “our contingent and possessed insurance policy” has been reduced to approximately US$2.75 billion following the Aeroflot settlement.

AerCap said it had secured permission from the U.S. Treasury and Commerce departments to complete the deal, which it said was “consistent with other applicable sanctions regimes.”

 EU sanctions do not prohibit such insurance settlements with Russian entities, depending on the details of the deal, lawyers say. (£1.00 = US$1.27 at time of publication).