By Abhijith Ganapavaram
(Reuters) – Air Lease Corp said on Wednesday a new Russian law on leased aircraft showed Moscow intended to “confiscate” planes, adding this would help lessors in claims with insurers.
“I think it helps the insurance question because it demonstrates the intent to confiscate which is, I think, a critical aspect of our war-risk insurance,” Air Lease chairman Steven Udvar-Házy said.
The company also has “very strong security deposits” on leased aircraft, Udvar-Házy added.
Air Lease’s finance head Gregory Willis said “it’s within the realm of possibility” the U.S. and European Union governments may step in to provide support to the leasing industry if insurance payments became an issue.
Shares of Air Lease were up 4.4% at $41.63 in afternoon trade.
Moscow passed a law on Monday allowing the country’s airlines to place airplanes leased from foreign companies on the country’s aircraft register, raising fears of a mass default. Russian airlines have almost 780 leased jets, with 515 from abroad.
The law also raises the possibility of a long-drawn fight between lessors and insurers on payouts.
According to The Insurer, AerCap Holdings NV, the world’s largest aircraft leasing company, had notified insurers of a potential $1 billion loss from the law. (https://bit.ly/3MWfAJK)
AerCap declined to comment.
Air Lease’s Udvar-Házy sought to allay fears and stated all of the company’s aircraft were with privately-owned carriers in Russia who prefer to continue doing business with western firms.
“The advantage dealing with the privately-owned airlines is they very much see the endgame beyond this current crisis or believe there is life after this crisis,” Udvar-Házy said.
Air Lease, which had less than 5% of its fleet by net book value on lease to customers in Ukraine and Russia, added it was making “good headway” in cutting exposure to the sanctions-hit country.
(Reporting by Abhijith Ganapavaram in Bengaluru and additional reporting by Tim Hepher in Paris; Editing by Krishna Chandra Eluri)
