The agreement meant AerCap, the world’s largest aircraft leasing giant, had settled its claim over Russia’s refusal to return the 17 jets. It marked a landmark agreement in a dispute over a total of 400 Western planes owned by a number of entities stranded in the wake of the Ukraine invasion.

For its part, Aeroflot said it would continue negotiations on the settlement of claims with other leasing firms. Last month, a similar settlement was made with Ireland-based SMBC Aviation Capital that was worth $710m for 16 aircraft and engines.

Sergei Alexandrovsky, chief executive of Aeroflot, said at the time the settlements would allow the aircraft to be removed from the foreign registry and be used on foreign routes, without running the risk of the craft being seized. He indicated Aeroflot would continue discussions with aircraft leasing operators to settle claims relating to foreign-manufactured aircraft.

Russia’s largest private airline, S7 Airline, is also in the final stages of discussions with aircraft leasing firms to complete settlements of insurance claims on aircraft detained in Russia. S7 Airline had more than 40 aircraft leased from AerCap at the time of the invasion in February last year, according to publicly available data.

The landmark deals, which were approved by the US and the EU, mean the planes become the property of Russian airlines. Hundreds of millions of euro will also go back to the Irish-based leasing industry.

The deals also provide an insight into the way the Russian airline industry is able to overcome Ukraine war economic sanctions. It must be remembered that Aeroflot and other Russian airlines fly freely to China, India, South America, and Africa, where they are not affected by EU and US sanctions against Russia.

Although the Russian market is relatively small in terms of global air traffic, it had more than its share of leased aircraft, and consequently a large exposure to Irish leasing companies.

Many in the aviation industry have managed through the insurance settlements to overcome their exposure to Russia. They and are now focused on the potential exposure to China, given the political tension over Taiwan. However, China is a large part of the global marketplace that it will be hard for aircraft leasing firms to ignore, should tensions escalate.

The Irish-based leasing giants own more than 60% of the world’s leased aircraft fleet. Based on Central Statistics Office figures, the companies could be on course to generate more than €18bn in revenue this year. They face many geopolitical, regulatory, and legal exposures, however.

Nonetheless, the industry is trading well. 

AerCap last month posted strong results, saying it had tapped increased leasing revenue. The increase in demand for aircraft is reflected in data from the International Air Transport Association, or IATA, which showed European air travel was continuing to recover strongly, and was set to exceed pre-pandemic levels next year.

IATA also said that an unprecedented 20 new airlines were launched in Europe in the past year. That likely augers well for Ireland’s leasing sector as aircraft leasing is a key part of the business model for airline start-ups.