Lessor AerCap agrees to settlement over stranded Aeroflot jets

(Reuters) — The world’s largest aircraft lessor has agreed to settle an insurance claim over Russia’s refusal to return 17 jets leased to airline Aeroflot, a landmark agreement in a dispute over 400 Western planes stranded in the wake of the Ukraine invasion.

Ireland-based AerCap said in a stock market filing it had received $645 million from insurance company NSK in full settlement of insurance claims in relation to 17 aircraft and five spare engines leased to state-controlled airline Aeroflot and its subsidiary Rossiya.

The planes would now become the property of Russian state-owned NSK.

“We have released our claims against NSK, Aeroflot, Rossiya and their international reinsurers with respect to these aircraft and engines,” AerCap said.

Before last year’s invasion of Ukraine, Russia was a major market for aircraft lessors, which bought jets from Boeing and Airbus and leased them to Russian airlines.

The invasion triggered Western sanctions that forced lessors to cancel hundreds of leases. Moscow then refused to allow the planes to leave.

AerCap said it had secured permission from the U.S. Treasury and Commerce departments to complete the deal, which it said was “consistent with other applicable sanctions regimes.”

EU sanctions do not prohibit such insurance settlements with Russian entities, depending on the details of the deal, lawyers say.

The deal, an apparent compromise in an economic war between Moscow and the West, looks set to lower a bill facing insurers, which are locked in court cases over who should pay for the loss of up to $10 billion.

AerCap filed a $3.5 billion London lawsuit last year against American International Group Inc. and Lloyd’s over 141 aircraft and 29 aircraft engines it owned that were on lease to Russian airlines. A number of smaller lessors also have jets stuck in Russia, including SMBC Aviation Capital, which had 34.

AerCap said the amount of its claim against its all-risks insurers under “our contingent and possessed insurance policy” has been reduced to approximately $2.75 billion following the Aeroflot settlement.

AerCap said settlement discussions were ongoing with respect to claims under the insurance policies of several other Russian airlines.