Century City-based Air Lease Corp. on April 22 disclosed that it is taking a write-down of $802.4 million on 27 aircraft with terminated leases remaining in Russia after economic sanctions imposed on the country took effect on March 28.
The sanctions were levied by the U.S. and Western European governments following Russia’s Feb. 24 invasion of Ukraine.

The disclosure came in a special filing Air Lease made with the Securities and Exchange Commission after market close on April 22 and two weeks prior to the company’s scheduled first-quarter earnings release.
In the filing, Air Lease said it had approximately 3.4% of its fleet by net book value on lease to customers in Russia as of March 31, 2022.

“In response to the sanctions, the company terminated the leasing of all aircraft leased to Russian airlines,” the filing stated. “The company has determined that it is unlikely that the company will regain possession of the aircraft that have not been returned and that remain in Russia, which represent 21 aircraft in the company’s owned fleet and six aircraft in the company’s managed fleet.”

In the filing, Air Lease said it does not expect the write-off to result in material future cash expenditures for the company.
Furthermore, the filing said, “the company is vigorously pursuing insurance claims to recover losses relating to these aircraft.”

The filing said that more detailed information would be presented in the regular quarterly filing set for May 5.
Air Lease shares fell 5% upon market open on April 25, but trimmed their losses during the rest of the trading day, closing down 1% at $44.34. That drop came amidst a broader market selloff that saw the Dow Jones Industrial Average index fall nearly 3% that same day.

Air Lease had previously disclosed during a mid-March investor conference that it had 29 planes on lease to Russian airlines – all private (non-state-owned) carriers. But while Air Lease executives had been optimistic about regaining control of several of those aircraft in advance of the March 28 sanctions deadline, it appears in the end the company was able to reclaim only two of the aircraft.

Now that the number of aircraft stranded in Russia and no longer under Air Lease’s control has been more firmly established and a write-down figure set, the stage is set for a battle between Air Lease and its insurers.