AerCap Holdings lost 113 planes to Russia due to sanctions

AerCap Holdings, the aircraft leasing giant that is the world’s biggest jet owner, lost 113 planes when Russia seized them in response to sanctions triggered by the war in Ukraine.

The seizures of the planes and 11 jet engines by Russian authorities caused AerCap to charge $2.7 billion before tax during the quarter, causing the company to report a net loss of $2 billion instead of profit from $500 million I would have made without hitting him.

But company executives said the quarter was really good and they see better times ahead as global demand for flights continues to recover from the Covid pandemic.

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

Investors agreed and shares in Dublin-based AerCap gained 6% in afternoon trading following the report.

The company managed to recover 22 jets and 3 engines before they were seized by Russian authorities. The company has filed insurance claims to try to recover the lost aircraft, although some of those claims are with Russian insurance companies.

These policies are backed by Western reinsurance companies, but AerCap said that “the timing and value of any recoveries under these policies are uncertain.”

The company owns a total of 1,624 aircraft, far more than any airline owns or operates. The jets lost to Russia accounted for less than 5% of the net value of Aercap’s fleet, which grew during the pandemic by buying rival leasing company GECAS from General Electric.

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

“Once the documentation goes, there’s very little point in trying to get them back,” he said.

When Russia invaded Ukraine on February 24, Russian air carriers were operating 861 commercial planes, according to data from aviation analytics firm Cirium. Just over half of these planes, with an estimated market value of $9.2 billion, belonged to non-Russian leasing companies.

Sanctions from several countries required international aircraft leasing companies that owned the jets to get them back by the end of March. An estimated 79 jets were recovered, but Russia announced it was nationalizing hundreds more.