Dubai’s DAE Capital Secures $118 Million Settlement in Aeroflot Aircraft Deal

Dubai-based aircraft lessor DAE Capital has successfully navigated a complex financial settlement, securing approximately $118 million in a cash insurance settlement. This significant financial move comes as a resolution to the lessor’s pending claims with Aeroflot (SU, Moscow Sheremetyevo), relating to aircraft previously leased to the Russian airline.

The settlement covers claims under Aeroflot’s insurance and reinsurance policies for seven aircraft and their associated engines. DAE Capital, in its December 19 statement, emphasized that the receipt of funds from NSK, a Russian state-owned insurer, complied fully with all relevant sanctions regimes.

With the insurance settlement proceeds received, DAE-affiliated entities have released their claims against NSK, Aeroflot, and their international reinsurers concerning these aircraft and engines. This development is part of a broader narrative stemming from Russia’s invasion of Ukraine in February 2022. Following the invasion, DAE, among other lessors, terminated contracts with Russian airlines in line with international sanctions, leading to a situation where about 400 foreign-owned aircraft were stranded in Russia.

DAE Capital’s settlement is not an isolated incident. It follows a pattern of similar agreements, such as the one between the Aeroflot Group, encompassing Aeroflot, Pobeda, and Rossiya, and various lessors including AerCap, SMBC Aviation Capital, CDB Aviation, and BOC Aviation.

Furthermore, DAE Capital’s statement disclosed ongoing discussions regarding insurance settlements with several other Russian airlines. These negotiations are shrouded in uncertainty, particularly concerning the approval and funding required to finalize any further settlements.

This settlement, part of a larger $1 billion claim filed by DAE Capital post-invasion, also mirrors the company’s financial adjustments, including a reported $538 million write-off for aircraft stranded in Russia, as per Reuters. The developments mark a significant moment in the aviation leasing industry, reflecting the complex interplay of international relations, finance, and the airline industry.