The fallout from Russia’s 2022 invasion of Ukraine continues to ripple across the aviation world, but recent insurance settlements are bringing a measure of stability back to the aviation asset-backed securities (ABS) market.
Financial Technology Insights: Tether to Launch USD₮ on RGB, Expanding Bitcoin Stablecoins
When sanctions forced global lessors to cut ties with Russian airlines, hundreds of aircraft worth an estimated $10 billion were effectively stranded after Russian authorities blocked their return. These aircraft were insured under war risk policies, sparking fierce disputes among insurers, airlines, and lessors over who was responsible for the staggering losses.
Financial Technology Insights: Moca Network Launches AIR Shop with Spree & BookIt
What followed was a wave of lawsuits, with the first breakthroughs coming in 2023 after partial settlements involving Russian insurer NSK. Since then, momentum has built. Global lessors like AerCap, Air Lease, and SMBC have reached significant settlements with heavyweight insurers such as AIG, Lloyd’s, Chubb, and Swiss Re. Court rulings confirming coverage under war risk policies tipped the scales in favor of lessors, setting the stage for these deals.
Financial Technology Insights: Mastercard & Infosys Team Up to Simplify Global Payments
For investors in aviation ABS, the impact has been meaningful. Settlement proceeds have flowed into ABS trusts, helping reduce leverage, improve debt service coverage ratios (DSCR), and enable principal catch-up payments. In some cases, this financial lift has already led to positive rating upgrades signaling renewed confidence in a sector that had been weighed down by uncertainty.
KBRA’s new research highlights these shifts, pointing to insurance recoveries as a critical factor in stabilizing the market and restoring faith among investors navigating the complex aftermath of the Russia-Ukraine crisis.
To share your insights with the FinTech Newsroom, please write to us at sudipto@intentamplify.com