Air Lease Corporation (ALC) said on March 24, 2025, that it has received $328.5 million in insurance payouts, as part of insurance settlements related to its aircraft which were blocked from leaving Russia after the country's invasion of Ukraine in 2022.
Following the February 2022 invasion, over 400 aircraft were stranded in Russia, forcing the termination of their leases. These sanctions forced aircraft leasing companies to cancel their contracts with Russian carriers by March 28, 2022, initially leaving an estimated $10bn worth of assets inaccessible.
ALC said in a regulatory filing that under the settlement agreements, ALC agreed to drop its claims against the settling insurers in both a case in California, along with a related lawsuit in London involving Russian airlines’ insurers.
The lessor also stated that it is in talks with other insurers but cannot predict if further settlements will be reached, or how much they might recover. This brings ALC’s total recovery to $424.3 million, out of the $791 million loss it wrote off in 2022.
In response to this settlement, TD Cowen analysts Moshe Orenbuch and Burç Okumuş commented: “With this recovery, Air Lease’s leverage ratio will decline to 2.53x from 2.62x, assuming an 18.5% tax rate on the gain.”
The analysis also noted that the company’s leverage target is 2.5x, and this development increases the likelihood of capital actions in 2025.
“The remaining claim amount is $367 million ($299 million after tax), and if fully recovered, the leverage ratio would further decrease to 2.44x, better than the company’s target, potentially accelerating its ability to return capital,” they added.
The remaining $299 million after-tax amount represents approximately 4% of Air Lease’s book value.
In February, both Avolon and BOC Aviation settled lawsuits in the Irish courts against insurers over aircraft detained in Russia following the issuance of Western sanctions three years ago.
Avolon was subject to an impairment charge on aircraft in Russia during 2022, impacting the company’s reported performance. By the middle of the year ten Avolon aircraft were still stuck in Russia, costing the lessor $244 million. Similarly, BOC lost $90 million in lease rental contributions from its Russian portfolio during 2022.