Avolon Reports US$304m Impairment on Russia

DALLAS - Avolon has recorded a US$304m loss on aircraft leased to Russian customers who are now subject to international sanctions. The recognition reduces the carrying value of 10 aircraft to zero, according to the lessor's Q1 results update on May 3.

Avolon had 14 planes placed with Russian customers prior to Russia's invasion of Ukraine on February 24. Three were outside Russia for maintenance just before the sanctions were imposed, and one had been returned by the lessee. This left 10 planes in Russia, which Avolon attempted but failed to reclaim.

An S7 Siberia Airlines' (S7) Airbus A320neo was delivered to the airline in July 2021 and continues to operate under its original Bermuda registration, despite the fact that the island nation de-registered all aircraft operated by Russian airlines.

Avalon's US$304m impairment is offset in part by US$43m in other lease-related balances for a net impact of US$261m. The impairment has resulted in a US$182m net loss for Avolon in the first quarter of 2022.

Comments from Avolon Officials

Avolon CEO Dómhnal Slattery said in a media statement, "While we continue to make every effort to recover these assets and are pleased to have repossessed four aircraft, we are recognizing the full impairment this quarter, putting the financial impact of Russian sanctions firmly behind us."

The aircraft leasing company, based in Dublin, Ireland, and founded in May 2010 by Slattery and a team from RBS Aviation Capital, had 592 owned aircraft and 240 on order at the end of the first quarter. It fulfilled promises to sell and lease back sixteen aircraft. Three aircraft were sold, and Letters of Intent were issued to sell a further 35.

Air Lease Corporation had already reported an US$802m impairment on its aircraft in Russia, followed by Aircastle with a US$252m write-off.

Featured image: Avalon.