Aircraft lessor SMBC strikes deal with Aeroflot insurer for 16 planes

Aircraft lessor SMBC Aviation Capital received $710 million in cash from a Russian insurer for 16 aircraft and engines previously leased to Russia’s state-owned flagship airline Aeroflot, nearly half its asset losses following the Russian invasion of Ukraine.

The sum constitutes a settlement of SMBC Aviation Capital’s insurance claims under Aeroflot’s insurance and reinsurance policies relating to the assets. SMBC added that an additional insurance settlement has been concluded for one other aircraft and engine managed by SMBC Aviation Capital, but offered no details.

“SMBC Aviation Capital will continue to actively pursue its litigation in the Irish courts under its own insurance policies,” management said in its statement.

“SMBC Aviation Capital will also continue its efforts to seek to mitigate its losses in respect of its aircraft that were previously leased to other Russian airlines.”

The settlement has been cleared with US authorities for sanctions compliance, SMBC said.

SMBC had claimed an aggregate one-off impairment of $1.6 billion on loss of 34 owned aircraft after it terminated leasing deals following the onset of Russia’s invasion of Ukraine and the imposition of sanctions.

Beyond the claim against the Russian insurer, SMBC Aviation Capital and partners have also filed suit against Lloyd's and ten insurers including units of Chubb, Swiss Re, HDI Global, Fidelis, AIG, SCOR, Starr Insurance, Great Lakes Insurance, Mitsui Sumitomo and Global Aerospace Underwriting Managers.

The announcement follows word of a similar deal between aircraft lessor AerCap and Aeroflot's insurer. AerCap received $645 million in cash and claimed to have cut its total outstanding claim on aircraft and engines lost after the Russian invasion of Ukraine to $2.75 billion. AerCap also has suits against its own insurers.

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