Aeroflot settles dispute with Irish lessor over 18 aircraft

18 planes became the property of a Russian insurance company, which paid for them the funds of the Irish AerCap. After the imposition of sanctions, the company stopped working with Russian carriers, they leased ships from it

The Russian airline Aeroflot has completed the settlement of a dispute with the Irish company AerCap on 18 aircraft that were leased from it, RBC was told in the press service of the air carrier.

“In accordance with the agreement reached, AerCap has terminated its claims against the Russian parties both under insurance policies issued by Russian insurance companies and under leasing agreements with Aeroflot PJSC and Rossiya Airlines JSC,” the statement said. The issue of five aircraft engines was also resolved.

The ownership of the aircraft and engines was transferred to the insurance company NSK Insurance Company LLC, which paid the amount for the aircraft to settle the dispute.

“Insurance company NSK is controlled by the Federal State Unitary Enterprise “Administration of Civil Airports” subordinate to the Federal Air Transport Agency and was created, among other things, to insure the risks of air carriers in connection with sanctions pressure, an Interfax source said. It owns the NLK-Finance leasing company; in April, the Ministry of Finance purchased its bonds for almost 35 billion rubles.

In February last year, the EU imposed a ban on the export to Russia of goods and technologies used in the aviation and space sectors, in particular aircraft, spare parts and equipment, as well as on insurance and maintenance of goods related to these industries. Against this background, Russian airlines faced the risk of arrest of leased Airbus and Boeing aircraft that were abroad, and therefore stopped flights abroad.

After the imposition of sanctions, AerCap decided to stop cooperation with Russian airlines (its clients were Aeroflot, Rossiya, S7, Yakutia, Ural Airlines, Yamal, Nordwind Airlines and Azurair). In the spring of 2022, AerCap filed a $3.5 billion insurance claim against its aircraft and engines that remained in Russia after the termination of leasing agreements.

To resolve the problem with aircraft, the Ministry of Transport offered Russian airlines to buy out aircraft from foreign lessors with the help of the National Welfare Fund (NWF). It was decided to allocate funds for these purposes on loan, at a rate of 1.5% for 15 years.

Aeroflot previously reported buying at least 18 ships, including 10 from an Irish lessor (the name of the company was not specified). As the head of the air carrier, Sergei Aleksandrovsky, said, it was planned to create a special leasing company to implement the project to buy out Aeroflot's foreign aircraft from the operating lease. After the purchase of aircraft from foreign lessors, the carrier will pay lease payments to it. The scheme is necessary to ensure the return of funds received from the NWF.

The company's press service clarified that they continue negotiations with other lessors to resolve disputes regarding other aircraft.

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