Dublin-based AerCap has the largest exposure in terms of jets now stranded after Vladimir Putin's invasion of Ukraine
The European Commission is ruling out any financial compensation for aircraft lessors sitting on losses running into billions of euro after their jets were seized by Russia following its invasion of Ukraine, the Irish Independent has learned
Billions of dollars worth of aircraft – most of them either new or just a few years old – were trapped in Russia after the European Union imposed sanctions on the country after the war began.
Financial services commissioner Mairead McGuiness had previously left a window open to potential avenues of loss mitigation for aircraft lessors.
However, Filip Cornelis, the director for aviation at the European Commission’s transport directorate, has told the Irish Independent that there will be no special measures for the lessors.
“We are very aware and sympathetic to the losses and the damage that they have sustained,” he said.
“They are going for the insurance claims, court cases,” said Mr Cornelis of the lessors. “We don’t have money to compensate anybody who is suffering from collateral damage from the situation. I won’t say collateral damage from our sanctions, because these are not caused by our sanctions. We don’t have an aid scheme in place related to the war, so that’s not going to be possible.”
“They’re not the only ones who are suffering from the sanctions,” he added. “There’s always collateral damage in the case of sanctions.
“We are faced here with a country that is basically unwilling to respect any decency in international relations and not respecting contracts, not respecting international safety rules,” said Mr Cornelis.
“The Russians make it up as they go along… lying their heads off,” he said in an interview on the fringes of the ATM World Congress in Madrid. “They claim they had no other choice than for the safety of the aircraft to re-register them illegally in Russia. Well, the other choice they have is to give them back to the owners.”
Mr Cornelis said that the Commission has undertaken a significant amount of work with lessors to help them repossess aircraft where possible. However, Russia has banned the seized jets from being flown outside its territory in case they are grounded in other countries.
“Most of their aircraft, they’re not going to get back,” he said of the lessors.
Dublin-based AerCap was the most exposed lessor to Russia in terms of jet numbers. It had 135 owned aircraft and 14 owned engines on lease to Russian airlines at the time of the invasion. It managed to repossess 22 jets and three engines, worth around $400m (€379m). The total number of aircraft it had in Russia was a small percentage of its overall fleet by net book value.
AerCap has filed a $3.5bn insurance claim in respect of the assets it still has in Russia, while it and other lessors have also launched court actions against insurance firms to recoup losses.
In May, the Irish Independent revealed that two Irish units of aircraft lessor Aircastle had launched a near $25m claim against Unicredit in London, in the latest move by the leasing sector to enforce letters of credit related to seized aircraft.