The seizures of the planes and 11 jet engines by Russian authorities caused AerCap to charge $2.7 billion pre-tax during the quarter, causing the company to report a net loss of $2 billion instead of the $500 million profit it reported. it would have made it without the hit. But business leaders said the quarter was actually a good quarter and they see better times ahead as global demand for flights continues to recover from the Covid pandemic.
“But given the impact from Russia, this is a strong underlying quarter for the company,” CEO Aengus Kelly said, commenting to analysts. “Across all of our businesses…we are seeing increasing demand, increasing use of our assets and improving the financial health of our customers.”
The company was able to salvage 22 jets and 3 engines before they were seized by the Russian authorities. It has filed insurance claims to recover the lost plane, although some of those claims lie with Russian insurance companies. Those policies are backed by Western reinsurance companies, but AerCap stated that “the timing and amount of any recoveries under these policies are uncertain.”
Aercap should easily absorb the financial loss from the jets, said Richard Aboulafia, director of AeroDynamic Advisory. Even if the war ended and sanctions were lifted, the planes would have lost their operational certificates in the eyes of Western aviation regulators.
“Once the documentation is gone, there’s little point in even trying to get it back,” he said.