Irish aircraft leasing company AerCap said it had aircraft and engines on lease to Russia with a net book value of $3.1 billion ahead of the invasion of Ukraine, but that its exposure was "manageable."
AerCap is the world's largest aircraft lessor and 5% of its fleet by net book value was leased in Russia at the end of 2021.
In a presentation for its fourth quarter results, it said it had repossessed and removed from Russia 22 aircraft and three engines that it owned, with a net carrying value of $400 million.
It said it expects to recognise an impairment on their assets in Russia that have not been returned to them as early as the first quarter of this year.
However, it said it had not yet determined the size of the impairment it would book on its Russia losses.
When the Russian sanctions were imposed, AerCap accounted for 142 of the 515 jets Russian carriers had leased from abroad, consultancy IBA said.
In today's results statement, the company said it executed 230 transactions in the fourth quarter 2021, including 158 lease agreements, 42 purchases and 30 sales.
Fourth quarter cash flow from operating activities came in at $1.7 billion, more than two and a half times higher than the fourth quarter of 2020.
EU competition regulators last year approved without conditions AerCap's $30 billion bid for General Electric's aircraft leasing business.
The deal between the world's two largest aircraft leasing companies created a new financing giant and the largest buyer of jetliners built by planemakers Airbus and Boeing.
AerCap said today it intends to fully comply with all of the sanctions imposed on Russia, adding that it has terminated the leasing of all its aircraft and engines with Russian airlines.
"We continue to make efforts to repossess additional aircraft and engines from our former Russian airline customers, but it is unclear if we will be able to do so, or what the condition of these assets will be at the time of repossession," AerCap said.
"We expect to recognise an impairment on our assets in Russia that have not been returned to us as early as the first quarter of 2022, although we have not determined the amount of any impairment," it added.
Aengus Kelly, chief executive of AerCap, said that 2021 was a milestone year for the company as it closed the GECAS transaction on 1 November.
"This transaction significantly enhanced and diversified our fleet, broadened our customer base and geographic reach, increased our product offering and added outstanding new talent - the combination of which we expect to lead to increased revenues, earnings and cash flows in the future," Mr Kelly said.
"Notwithstanding the Ukraine invasion and the broad sanctions imposed against Russia, where we had approximately 5% of our fleet, we believe the continued recovery in air travel in many parts of the world puts AerCap on a positive trajectory heading into 2022," he added.
Lessors had until Monday to wind up current rental contracts in Russia under sanctions imposed by the European Union after Moscow's invasion of Ukraine, leaving them facing heavy potential writedowns or a long insurance battle.
Aercap last week submitted an insurance claim for approximately $3.5 billion for aircraft and engines it has been unable to repossess from Russian lessees, its chief financial officer said today.
"Last week we submitted an insurance claim for approximately $3.5 billion with respect to our aircraft and engines remaining in Russia," Peter Juhas said on an investor conference call after the publication of financial results for the final three months of 2021.
