ALC has decided to give up attempts to bring back 27 plans stuck in the country one month after the deadline to end leases with Russian carriers hit. The move wipes out 3.4% of the lessor’s fleet value and sets up a massive insurance claim for over $800 million.
No plans coming back from Russia
In an SEC filing on Friday, spotted by Aerotime, Air Lease Corporation (ALC) confirmed that it does not expect to repossess 27 of its remaining aircraft in Russia. Lessors had until 28th March to terminate all leases with Russian airlines. However, an emergency law in the country has opened the door to re-registering plans in Russia.
Since Russia won’t allow the plans to leave home soil, ALC has opted to drop attempts to seize the aircraft and instead file for an insurance claim instead. 21 aircraft are owned directly by the lessor, while six are a part of its managed fleet. In total, these are valued at over $802.4 million and the write-off will be included in next quarter’s results.
ALC is less exposed than other big lessors, but will definitely be pushing for its insurance claims to be accepted. Photo: Boeing
The decision is hardly surprising given the current hostilities, with Russian carriers opting to fly their plans domestically or to “friendly countries” where seizures are unlikely to occur. However, ALC will now be locked in negotiations with its insurance companies to recover the massive impairment charge.
New registrations
On the ground, Russia has been rapidly re-registering foreign plans at home to circumvent penalties and international aviation law to keep them in the sky. In less than two months, 360 aircraft have been converted to RA- numbers, representing 70% of all foreign-leased plans.
This has become necessary since most of the plans in the country were registered abroad in places like Bermuda, which revoked their airworthiness certificate in response to sanctions. With no valid certificates to fly, Russia opted to bring them under national law and avoid international safety regulations.
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Lessors have lost billions in fleet value since February due to the ongoing war and sanctions. Photo: Vincenzo Pace | SimpleFlying
However, LAC is not the worst hit by the current sanctions. AerCap recently filed a claim for over 100 plans valued at $3.5 billion, similarly mentioning that bringing back the plans was unlikely. For now, all eyes are on how much insurance companies will payout for these claims.
fallout-from-the-war
Russia’s invasion of Ukraine has had an enormous fallout on global aviation. With Western and Russian airspace closed to each other’s plans, the international flight maps have been redrawn. This has led to some complicated flight paths that will hurt travelers for the foreseeable future. However, with no end in sight for the conflict, the situation is likely to remain the same for average passengers.
What do you think about ALC’s decision? Let us know in the comments.
Source: Aerotime
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