AerCap records €2.3bn quarterly loss due to hit on aircraft based in Russia

Dublin-based lessor has filed insurance claims for aircraft and engines subject to sanctions against Russia

Aircraft lessor Aercap lost almost €2.3 billion on planes and equipment leased to Russia, results published on Tuesday show.

Dublin-based Aercap buys aircraft and engines to lease to airlines around the world. The company confirmed that the loss of aircraft leased to Russian airlines following that country's February invasion of neighbouring Ukraine cost it a net $2.4 billion (€2.28bn).

Aercap has filed insurance claims totalling about $3.5 billion for all aircraft and engines remaining in Russia and says it intends pursuing these fully. However, it cautions that the amount and timing of any money recovered under these insurance claims remains uncertain.

Aercap terminated aircraft and equipment leases with Russian airlines to comply with sanctions imposed on that country following the invasion.

The Irish group has 113 aircraft and 11 engines leased to Russian airlines that it was unable to repossess. Originally it had 135 planes and 14 engines located there, but it was able to take back 22 aircraft and three engines.

The total cost was $3.17 billion as a consequence. A $237 million write-off of lease-related liabilities and $210 million received on foot of letters of credit relating to those agreements cut this to $2.73 billion. The consequent tax reduction cut the net bill to $2.4 billion.

Russian aircraft

Aercap lost $2 billion in the first three months of the year, including the loss booked for the Russia-based aircraft. Excluding this, it generated a net profit in the quarter of $540 million, leaving it with earnings of $2.23 a share.

Aengus Kelly, chief executive, said the company continued to see a broad recovery in world air travel as governments eased Covid restrictions.

“We expect to see demand for travel continue to grow as the recovery progresses,” he added.

Aercap did 157 deals during the first quarter, including 102 leases, 25 purchases and 30 sales. Its operations generated $1.3 billion in cash.

Total revenues rose 63 per cent to $1.8 billion in the opening three months of the year, up from $1.01 billion during the same quarter in 2021. That included a 62 per cent rise in lease revenues to $1.74 billion in the period to March 31st.

Aercap noted that the increase in revenue was due mainly to its takeover of rival GE Capital Aviation Services last year.

At the end of March, it owned, managed or had ordered 3,615 aircraft, engines and helicopters. Net assets dipped 12 per cent to $14.73 billion on March 31st from $16.65 billion 12 months earlier.