In a surprising move, AerCap and Aeroflot Group have come to an agreement over stranded Airbus and Boeing aircraft in Russia. This is the first known deal of this sort since sanctions hit Russia due to its invasion of Ukraine. Both companies confirmed that they’ve been in full negotiations and have now exchanged a cash payment for the aircraft.
The Deal Details
Aeroflot Group, the parent company of Aeroflot, Pobeda, and Rossiya, announced on September 5 that they’ve settled their accounts with AerCap. The deal includes 18 aircraft and five aircraft engines. AerCap has dropped all claims against Russian parties, both from insurance policies and leasing agreements. The ownership of the aircraft and engines now belongs to NSK Insurance Company LLC, which paid the settlement amount.
AerCap revealed that they received around USD 645 million as a full settlement of their insurance claims. This was in relation to 17 aircraft and five spare engines leased to Aeroflot and Rossiya at the time of Russia’s invasion of Ukraine in February 2022. Interestingly, the number of aircraft mentioned by AerCap is one less than what Aeroflot stated.
Sanctions and Approvals
Both the US Department of Commerce and the US Department of the Treasury gave the green light for this agreement. The deal also aligns with EU sanctions, which don’t ban such insurance settlements with Russian entities, as long as certain conditions are met.
Ongoing Cases and Future Negotiations
Around 400 Western planes are thought to be stuck in Russia since the Ukraine invasion. Aeroflot had already bought eight A330s from foreign lessors and moved them to the Russian registry as early as May 2022. AerCap is also in the middle of a USD 3.5 billion lawsuit in London against AIG and Lloyd’s over 141 aircraft and 29 engines. This amount is expected to drop to about USD 2.75 billion after the settlement with Aeroflot.
AerCap stated that they are still in talks about insurance settlements with several other Russian airlines. However, the outcome of these discussions remains uncertain.
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