Russia’s S7 Airlines in Advanced Settlement Talks Over Detained Jets Following Ukraine Invasion

Russia’s S7 Airlines is in the final stages of discussions with aviation lessors about the aircraft detained in Russia after the invasion of Ukraine. These discussions could potentially bring down the losses for the (re)insurance industry.

S7, which stands as Russia’s largest private airline, has been engaging with multiple international lessors to hammer out a deal that aligns with imposed sanctions. If successful, this might compel domestic insurers, including the likes of Ingosstrakh and NSK, to compensate for the aircraft that have been detained.

These discussions are believed to be nearing conclusion, with prominent lessors such as AerCap and SMBC Aviation Capital thought to be part of the negotiation.

Data suggests that when Ukraine was invaded in February 2022, S7 had over 40 aircraft on lease from AerCap, with an estimated value exceeding $740 million.

Legal claims have emerged against aviation (re)insurers related to JSC Siberia Airlines, the official entity that oversees S7.

Previously, AerCap had reached a settlement concerning 17 aircraft and five engines that were leased to Aeroflot. This agreement might serve as a blueprint for subsequent negotiations involving other Russian airline operators.

This significant agreement made by AerCap could potentially set the stage for other similar settlements, potentially bringing down the disputed claims from an estimated ~$10 billion to a range of $2bn-$2.5bn.

Other recent notable settlements include those between Aeroflot and lessors which amounted to $904 million.

Additionally, CDB Aviation finalized a $194 million insurance settlement related to four aircraft that were previously leased to Aeroflot. In a similar vein, SMBC Aviation Capital reached a settlement worth $710 million for aircraft previously under lease to Aeroflot.

However, in spite of these settlements, companies like AerCap, CDB, and SMBC, along with their parent organizations, continue their legal battles in courts in London and Ireland. These battles revolve around insurance policies tied to the financial losses associated with Russian airline companies.

Sources: AirGuide Business airguide.info, bing.com, theinsurer.com