Focus: Aircraft Leasing Continues to Fight Lost Insurance Companies in Russia | Reuters

[Dublin, 10th Reuters]-Aircraft leasing companies around the world are preparing for insurance claims with the intention of “battle” with insurance companies, as hundreds of aircraft rented to Russia are irretrievable. At the same time, he continues to be cautiously in contact with Russian commercial airlines.

On May 10, aircraft leasing companies around the world are preparing for insurance claims with the intention of “battle” with insurance companies, as hundreds of aircraft rented to Russia are irretrievable. The photo shows an aircraft parked in Moscow on March 12 (2022 Reuters / Marina Lystseva).

Since Western countries have imposed sanctions on Russia, which has invaded Ukraine, leasing companies have been unable to recover more than 400 aircraft lent to Russia, worth about $ 10 billion, and have impaired hundreds of millions of dollars one after another in recent weeks. bottom.

Years before leasing companies attending the industry event “Airline Economics” in Dublin, Ireland, know how much insurance they can secure in an unpredictable battle with insurance companies. I was told that I had to wait.

Meanwhile, insurance premiums have risen significantly.

“In reality, no one thinks we can get the aircraft back soon. Psychologically it’s already gone,” said Michael Ingles, CEO of Aircastle, a U.S. aircraft leasing company. I said.

“That doesn’t mean our team has stopped working, pursuing, and preparing in the face of the fierce conflict with the expected insurance company,” he said. The company impaired $ 252 million.

Stephen Udberhazy, founder of Air Lease Corp., which posted a loss of $ 802.4 million, said he was “energically” pursuing insurance claims.

The industry’s largest aircap has been charged the most, claiming $ 3.5 billion for more than 100 jets.

CEO Agnes Kelly admitted that the company, which has the largest asset balance in the Russian business, will suffer losses, but said, “Insurers will have to settle.”

“Costs will go up, but I’m not going to listen to insurers because they themselves will face competition someday,” he said, dismissing rising premiums.

Genesis in Ireland was one of the first leasing companies to renew their insurance after all leasing contracts for Russia were suspended due to Western sanctions. CEO Karl Griffin said the rise in insurance premiums was “a terrible sight.”

There is no prospect of how the battle between leasing companies and insurance companies will develop. S & P Global’s estimated aviation insurance losses range from $ 6 billion to $ 15 billion.

Niels Jensen, co-head of the aviation finance division at law firm Vision and Elkins, said it ultimately depends on the specific wording of the insurance policy.

According to legal experts, the biggest problem is the number of “reasons” for insurance payments related to Russia’s default, which could make a big difference in the amount of insurance.

Dubai-based DAE Capital is expected to collect insurance claims, and the $ 538 million impairment loss is “ready”. “It only takes time,” said Philoz Tarapoa, CEO.

A number of leasing companies have implemented impairment losses and are claiming insurance claims, but many have revealed that they have some contact with Russian commercial airlines. In recent years, Russian airlines have become more dependent on Western leasing companies and have been paying smoothly.

Both leasing companies claim that sanctions are strictly adhered to.

“We are all pursuing the same strategy, and we are in talks with airlines while making insurance claims,” ​​said Dan Cole, Chief Commercial Officer of Willis Lease Finance. There aren’t many acts being done. “

The Russian aviation industry, which rents aircraft, was an attractive market before the invasion of Ukraine. According to the leasing company, airlines want to avoid closing the door completely to future business, but are under strong pressure from the Russian government to break the ties.

According to John Plueger, CEO of Air Lease Corp, many Russian airlines call, “Understand, we are not fraudsters. We are not stealing your aircraft. Lease fees. I want to pay, but we are both stuck. “

Some airline officials avoid mobile phones, use prepaid phones, and meet away from the company.

“It’s clear that we’re worried that we don’t know who’s listening, and that fear escalated as the crisis progressed,” Pruger said. The dialogue continues, but he says he is “more cautious.”

Experts are worried that the insurance claim battle will generally worsen their attitude toward risk.

“The bigger problem is that the same thing could happen in a much larger country in Asia with the acronym C,” said Mark Iakey, a partner at World Star Aviation. “The shock to the industry as a whole will be greater, but it’s quite possible,” he cautioned.

(Padraic Halpin, Conor Humphries, Tim Hepher)


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