Lessor SMBC Aviation receives insurance settlement over Aeroflot jets stranded in Russia

By Shivansh Tiwary and Kantaro Komiya

(Reuters) -Ireland-based aircraft lessor SMBC Aviation Capital on Monday said it had received a cash insurance settlement of $710 million for its jets previously leased to Russia’s state-owned airline Aeroflot.

The lessor under Japan’s Sumitomo Mitsui Financial Group said the settlement amount reflects its claims on Aeroflot’s insurance related to 16 aircraft and their engines. An additional insurance settlement has been concluded for one aircraft and its associated engines managed by SMBC Aviation.

Before the invasion of Ukraine last year, Russia was a major market for aircraft lessors, which bought jets from Boeing and Airbus and leased them to airlines in the country.

These planes were stranded in Russia as Moscow has refused to release the jets after lessors canceled lease agreements to abide by sanctions from the West.

Last month, the world’s largest aircraft lessor, Aercap, said it had agreed to settle an insurance claim over Russia’s refusal to return 17 jets leased to Aeroflot.

SMBC Aviation said it would continue its efforts to mitigate the losses on aircraft previously leased to other Russian airlines. The lessor had also leased jets to S7 Airlines, Ural Airlines, Nordwind Airlines and Nordstar Airlines before terminating in March 2022.

Sumitomo Mitsui Financial Group, which owns SMBC Aviation through its leasing and banking units, said on Tuesday it would record $311 million equity gains of affiliated companies in its third-quarter consolidated earnings for the current fiscal period, which ends in March 2024.

The Japanese trading house Sumitomo Corp, which holds a minority stake in SMBC Aviation through a subsidiary, said it would book 30 billion yen ($200 million) after-tax profit from the insurance payment in the third quarter.

($1 = 149.8600 yen)

(Reporting by Shivansh Tiwary in Bengaluru; Kantaro Komiya in Tokyo; Editing by Maju Samuel and Gerry Doyle)