AerCap loses 113 planes to Russia amid counter sanctions triggered by Ukraine war

Aircraft leasing giant AerCap Holdings N.V. (“AerCap” or the “Company”) has reportedly lost 113 aircraft after Russia has seized them in a retaliatory move following sanctions amid the Ukraine war. The global leader in aircraft leasing reported financial results for the first quarter of 2022 ended March 31, 2022 on Tuesday. Moscow has confiscated as many as 11 jet engines, which has incurred the aircraft manufacturer a net loss of $2 billion.

The firm executed 157 transactions in the first quarter of 2022, including 102 lease agreements, 25 purchases and 30 sales before Russia seized the aircraft in defiance to the West's coordinated sanctions linked to the ongoing war in Ukraine. 

AerCap Holdings terminated the leasing of all of its aircraft with Russian airlines 

Ahead of the Ukraine conflict, the total cash flow from operating activities for the aircraft leasing firm was $1.3 billion, more than three times higher than the first quarter of 2021. There was a significant improvement in cash collections, trade receivables and deferral requests. At least 92% of new aircraft order bookings were placed through 2023.

In response to the US, UK, EU and allied nations' sanctions, AerCap Holdings had to terminate the leasing of all of its aircraft and engines with Russian airlines.

"Prior to the Russian invasion, we had 135 aircraft and 14 engines on lease with Russian airlines, which represented approximately 5% of AerCap’s fleet by net book value as of December 31, 2021. We have removed 22 aircraft and 3 engines outside of Russia, and 113 aircraft and 11 engines remain in Russia," the firm informed in its report that outlined the financial results for the first quarter 2022. 

The company otherwise would have made an estimated $500 million profit. While the company states that the quarter for 2022 was “really good” due to the COVID-19 pandemic recovery, the recent move by Russia has caused the firm AerCap to take a $2.7 billion pre-tax charge. The net loss for the first quarter of 2022, including net charges related to the Ukraine Conflict, was $2.0 billion, or $8.35 per share, the company informed on May 17, Tuesday. 

"But for the impact of Russia, this is a strong underlying quarter for the company," said CEO Aengus Kelly in comments to analysts, according to the firm's press release. "Across all our business lines, we are seeing improving demand, increased utilization of our assets and the improving financial health of our customers."

In the afternoon trading, although, the Dublin-based AerCap (AER) managed to gain 6% and was able to recover 22 jets and 3 engines from Russian authorities. But the company incurred heavy losses as it had signed the letters of credit related to the aircraft and engines leased to Russian airlines as of February 24, 2022. That cost the corporation approximately $260 million. "To date, we have received payments of $210 million related to these letters of credit. We have initiated legal proceedings against one financial institution which rejected our payment demands in respect of certain letters of credit," the global aircraft leasing firm informed. The total number of jets lost to Russia represents less than 5% of the net value of Aercap's fleet. Most of the planes have lost the operating certificates issued by the aviation regulators due to the Western sanctions.