Air Lease Corporation, one of the biggest aircraft leasing companies worldwide, is losing approximately $18 million per quarter in rental revenue due to aircraft currently detained in Russia, the company announced during its third quarter financial results.
The impact of the Russian invasion of Ukraine
In February, the Russian government decided to invade Ukraine in a move that shocked the world economy, including the aviation industry. Hundreds of commercial planes leased to Russian airlines remained stuck within Russian borders, and the leasing companies were unable to recover them. As of July 2022, the Washington Post reported that Russia still held more than 400 Western-owned aircraft. Recently, it was reported that Carlyle Aviation is asking for $700 million in damages from insurers over policies covering 23 aircraft stuck in Russia.
For Air Lease Corporation or ALC, the impact wasn’t as bad as for other leasing companies. In March 2022, the lessor terminated all its activities in Russia, consisting of 24 aircraft in its owned fleet, eight aircraft in its managed fleet, and the leasing activity relating to 29 aircraft that have not yet been delivered from its order book. These jetliners have been subsequently placed with other carriers. A total of 21 jetliners managed by ALC remained stuck in Russia.
ALC understands that it is unlikely to regain possession of the aircraft in Russia. As a result, it has recorded a write-off totaling approximately $802.4 million. These 21 aircraft were removed from its fleet as of March 31, 2022.
One plane recovered in the third quarter
In October 2022, Air Lease Corporation recovered one Boeing 737 MAX 8 aircraft that was detained in Russia. The returned MAX 8 plane was not operating and had been in storage in Russia since the MAX grounding in 2019. The leasing company does not currently anticipate the return of any other aircraft detained in Russia.
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As of November 3, 2022, 20 aircraft previously included in Air Lease Corporation’s owned fleet and six jetliners previously included in its managed fleet were still detained in Russia. The operators of these planes have continued to fly most of them despite the termination of leasing activities and ongoing demands for the returns of the assets, said the leasing company. Between these 20 aircraft (plus the MAX returned in October), they provided around $18 million per quarter in rental revenue to ALC.
Which aircraft are detained in Russia?
Data from ch-aviation states that there are 25 aircraft owned or managed by Air Lease Corporation in Russia. These planes are operated by four carriers, Nordwind Airlines, S7 Airlines, Ural Airlines, and iFly Airlines.
S7 Airlines has 13 aircraft from Air Lease Corporation, including six Airbus A320s, two Airbus A321ceo, and five A321neo. Nordwind Airlines has six aircraft, including two A321neos and four Boeing 737-800s, iFly Airlines has four Airbus A330s, and Ural Airlines has two jets, one A320neo and one A321ceo. Air Lease Corporation’s net fleet is composed of 382 owned aircraft, 92 managed, and 431 on order.
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Sources: Washington Post, ch-aviation.