Ural Airlines and S7 airlines have reached a settlement with aviation lessors concerning a number of aircraft and spare engines stranded in Russia.
A statement made by S7 Airlines on 22 December 2023 confirmed that the Russian airline had completed a deal with three lessors (AerCap, ALC and SMBC Aviation Capital) for 45 medium-haul aircraft, aided with the participation of Russian state insurance company NSK.
AerCap’s agreement with the Russian airlines (totalling approximately $527 million) represents a ‘full settlement of [their] insurance claims under the respective insurance policies’ of the airlines, confirmed the Irish lessor in a December 2023 Securities and Exchange Commissions filing, adding that a total of 47 aircraft and five spare engines had been involved in ongoing disputes with Russian airlines and their international reinsurers.
AerCap had 18 aircraft and one spare engine on lease to Ural Airlines, with a further 29 aircraft and four engines on lease to S7 Airlines. ‘The insurance settlements and receipt of the settlement proceeds were approved by the US Department of Commerce and the US Department of the Treasury and are consistent with other applicable sanctions regimes,’ confirmed the filing.
Additionally, Air Lease Corporation (ALC) received approximately $64.9 million from NSK in a cash settlement regarding four Airbus aircraft - three A320-200s and one A321-200 - leased to S7 Airlines, confirmed in a stock filing from December 22. Upon receipt of the funds, the title of the aircraft was transferred to NSK. ALC also had five A321-200s previously on lease to S7 that were not included in the insurance settlement. ALC stated that it "is in ongoing settlement discussions regarding aircraft previously leased to Russian airlines", adding however that it was "uncertain whether any of these discussions will result in any settlement or receipt of settlement proceeds and, if so, in what amount".
The aircraft remained with the Russian carriers when international sanctions were imposed on the nation followings its invasion of Ukraine in February 2022, leaving lessors in an uncertain position. In particular, restrictive measures imposed by the European Union Safety Agency Agency (EASA) decreed it illegal for ‘any aircraft operated by Russian air carriers… or for any Russian registered aircraft, or for any non-Russian aircraft which is owned or chartered, or otherwise controlled by any Russian natural or legal person, entity or body, to land in, take off from or overfly the territory of the Union’.
The aircraft, purchased with funds from Russia’s National Welfare Fund, may now be placed back into service with the nation’s carriers; which, once re-registered, may be used for foreign flights without breaching international sanctions.