ALC has decided to give up on trying to recover 27 leased aircraft stuck in Russia following new re-registration laws.
ALC has decided to give up attempts to bring back 27 planes 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 planes 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 planes in Russia.
Since Russia won’t allow the planes 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.
The decision is hardly surprising given the current hostilities, with Russian carriers opting to fly their planes domestically or to “friendly countries” where seizures are unlikely to occur. However, ALC will now be locked in negotiations with its insurance companies to recoup the massive impairment charge.
On the ground, Russia has been rapidly re-registering foreign planes at home to circumvent sanctions 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 planes.
This has become necessary since most of the planes 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.
However, ALC is not the worst hit by the current sanctions. AerCap recently filed a claim for over 100 planes valued at $3.5 billion, similarly mentioning that bringing back the planes 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 planes, 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.
Source: Simple Flying