Lessor Receives $710 Million Payout Over Aeroflot Aircraft Leases

Aircraft lessor SMBC Aviation Capital has advised that it has settled with the Russian state-owned insurer NSK for $710 million for the sixteen aircraft and additional engines leased to Aeroflot.

Since the invasion of Ukraine, lessors have found it challenging to repossess aircraft from Russia. Given widespread sanctions, Aeroflot, among other Russian carriers, have resorted to cannibalizing their own fleet for parts, much to the lessor’s horror. This is where insurers have stepped in.

For SMBC, the payout covered its aircraft and engines on lease to Aeroflot Group and stressed that the cash payment complied with the laws and sanctions against the Russian state. While $710mn is likely much lower than the value of the 16 aircraft, it is better than a multi-billion dollar financial impairment it would have to take before a settlement.

Photo: Media_works/Shutterstock

Second recent claim

Irish lessor AerCap also recently reached an insurance agreement with Russia last month over the settlement of 17 aircraft and five leased engines on loan to Aeroflot and Rossiya; the value of this payout was expected to reach around $645 million. It’s been over 18 months since the invasion, and the EU ordered all aircraft leases canceled, meaning lessors have been busy negotiating with insurance providers and even going to court at times to enforce contracts.

Photo: Media Works/Shutterstock

SMBC Aviation Capital is one of the world’s largest aircraft leasing companies, headquartered in Dublin and owned by the Japanese Sumitomo Mitsui Banking Corporation.

A big fleet

Given passengers at the airport are usually unsure if their aircraft is owned or leased by their operating carrier, it can be eye-watering to read how many SMBCs and other lessors own. It is estimated that over 40% of all aircraft are owned by lessors, which identifies just the market scale.

Looking at data retrieved from ch-aviation, the lessor maintains a robust fleet of a wide range of aircraft. This includes over 300 A320 family jets, 14 A350s, 174 Boeing 737s, and 11 787-8/9s. This is separate from aircraft and is also managed by the lessor. In general, the average age of SMBC’s fleet is 6.8 years.

Photo: Joe Kunzler | Simple Flying

This is all shadowed by the world’s largest lessor, AerCap, also based in Ireland, sitting at approximately 1,800 owned aircraft, an additional 900 owned and managed engines, and many more on order with manufacturers. Not only does it deal with aircraft, but through its subsidiary, Milestone Aviation Group, you can add in another 355 helicopters.

Sources: ch-aviation