DAE posts nine-month loss after writing off Russian aircraft leases

Plane lessor says it filed insurance claims and a lawsuit to recover amounts due under insurance policies

A DAE ATR72-600 aircraft. The company has said it is no longer in control of 19 jets in Russia. Photo: Dubai Aerospace Enterprise

Jet lessor Dubai Aerospace Enterprise recorded a nine-month loss after a $576.5 million write-off before tax related to “loss of control” over planes it previously leased to airlines based in Russia.

DAE incurred a loss of $335m in the first nine months of 2022, compared with a profit attributable to equity holders of $90.9m in the same period last year, it said in a statement on Thursday.

But before net exceptional items, the Dubai-based plane lessor said it earned a profit attributable to equity holders of $202.6m during the nine-month period ending September 30.

DAE had leased 22 aircraft to Russia-based airlines, but ended the contracts in compliance with western sanctions following the start of the Ukraine war.

The company repeated it had “no control” over 19 jets currently in Russia and that it "has no way" to determine whether the aircraft would be returned in the future.

"The group has insurance cover in respect of the 19 aircraft under a number of insurance policies and has filed insurance claims and a litigation claim to recover amounts due under the policies," DAE said, without providing details on which insurers it was suing and where the litigation claim has been filed.

A representative for DAE declined to comment.

Foreign lessors have lost control of about 435 planes in Russia, according to aviation advisory group Ascend by Cirium.

The future for these aircraft looks "bleak". For their rightful owners insurance will likely be the only recourse to reclaiming value for those assets in the long term and many of these assets will never again be seen in international markets, it said.

DAE's total revenue of $853.9m in the first nine months was down 7.7 per cent from $925.3m for the same period last year.

This was due to lower net lease revenue, primarily because of lease terminations of aircraft in Russia, cash accounting on customers who entered administration and divestments of aircraft offset by higher maintenance income, the company said.

Engineering maintenance service revenue and finance lease were also down during the period.

Despite the write-off, the group’s liquidity and capital adequacy ratios remain strong, the company said.

Available liquidity was $2.8 billion as of September 30, compared with $2.9bn at the end of last years on December 31, 2021.

DAE acquired 45 aircraft, sold 35, and signed 125 lease agreements, extensions, and amendments during the nine-month period.

"The global shortage of aircraft availability and a rising interest rate environment is resulting in higher lease rental rates and robust residual values for the existing fleet. We continue to see demand for aircraft from airlines globally as travel demand remains resilient," said Firoz Tarapore, chief executive of DAE.