Summary

  • Aircraft lessors settled $2.7 billion with Russia
  • Major leasing firms like AerCap received millions
  • Russia navigating losses and cut off from global aviation market

Around two and a half years after Russia seized hundreds of foreign-owned (but Russian-operated) aircraft, Reuters has reported aircraft leasing firms have struck settlements for over a quarter of the total number. The Full-Scale Russian Invasion of Ukraine triggered the West to impose crippling sanctions on the Russian aviation industry. Many of the Boeing and Airbus airliners operated by Russian airlines are leased aircraft owned by foreign companies. It has previously been reported that Russia has allocated $4 billion to buying out foreign-owned aircraft.

Aircraft lessors receive $2.7 billion

Reuters reported that the settlements between the leasing firms and Russia total around $2.7 billion, covering over a quarter of the approximately 400 seized aircraft. As part of the deals, the leasing companies handed ownership of the aircraft over to the state insurance company NSK, which in turn transferred them to Russian airline companies. This was not one settlement, but the result of a string of settlements.

A fleet of Russia's Aeroflot aircraft parked at an airport

Photo: Media Works | Shutterstock

According to Reuters, lessors have been “suing dozens of insurers over losses of at least $8 billion related to the trapped planes.” More legal cases are currently being heard in London and the United States.

Related

Russian Airlines Have Imported Over $1 Billion In Parts For Airbus & Boeing Aircraft Since May 2022

Sanctions by the West were imposed in February 2022 following Russia’s invasion of Ukraine.

Lessors settle batches of aircraft

Aercap, the world’s largest lessor, has secured two settlements so far. The first was for $645 million for over 17 jets and 5 engines (leased to Aeroflot), and the second was for $572 million for over 47 aircraft and 5 spare engines (leased to JSC Ural Airlines and S7 Airlines).

AerCap is also suing AIG, Lloyd’s of London, and others for $3.5 billion and the loss of 116 aircraft and 23 engines. Aircrastle, BOC Aviation, has outstanding claims against insurers. In October 2023, it was reported that SMBC Aviation Capital had received $710 million in a payout over Aeroflot aircraft. ​​​​​​CDB Aviation is based in Ireland, but owned by the China Development Bank. It settled for 1.417 billion yuan ($195 million) for four planes and later settled for a fifth aircraft.

S7 Airlines Airbus A310

Aircastle received $43 million for four aircraft among other settlements. Air Lease has received around $64.9 million for four Airbus jets leads to S7 Airlines (with another five unresolved). BOC Aviation received $219 million in October 2023 for nine seized aircraft leased to Pobeda and Rossiya (subsidiaries of Aeroflot) and another $50 million the next month for three aircraft leased to S7.

Other aircraft lessors that lost aircraft in Russia include Dubai Aerospace, GA Telesis, and SMBC Aviation Capital. Despite the settlements, many of these aircraft lessors have reported large aircraft asset write-downs.

Related

Sanction Reaction: Russia’s S7 Airlines Reverse-Engineers Engine Repairs For Boeing 737s & Airbus A320s

S7 Airline engineers are now reported to have been able to maintain some Western jet engines and keep the aircraft flying.

Russia goes its own way

An MC-21-300 flying in the sky.

Photo: BeAvPhoto | Shutterstock

As Russia is now cut off from the international aviation market, it is racing to find ways to service and maintain foreign Airbus and Boeing aircraft. It is also trying to substitute foreign components in its domestic aircraft so that it can once again build its own aircraft. But this comes with costs. For example, the MC-21 is now expected to arrive late, overweight, and with much lower performance than originally planned.

Leave a Reply

Your email address will not be published. Required fields are marked *