Russia Passes Law To Take Control Of Foreign Planes Left In The Country

Russia, on Monday, passed a law allowing the country¡¯s airlines to re-register and fly planes that had been leased from foreign companies.

The bill, signed by Russian President Vladimir Putin, will let its domestic airlines keep their fleets and operate foreign planes on routes within the country, Fortune reported.

AP

Russian airlines currently operate hundreds of foreign-owned planes. Airlines often lease planes from foreign owners to expand capacity quickly without needing to raise the capital to buy planes themselves.

But after European Union, the U.S., and many other countries across the world imposed sanctions on Russia over its invasion of Ukraine, foreign jet lessors are being forced to cancel contracts with Russian airlines.

Reuters

Western sanctions imposed after Russia¡¯s invasion of Ukraine gave plane leasing firms until March 28 to repossess aircraft from the country.

Last week, Russia¡¯s air-transport agency advised airlines with foreign-registered planes not to take them out of the country because of the risk they could be repossessed.

Various estimates place the number of foreign-owned planes operated by Russian airlines at around 500 or more, and the vast majority of them were inside Russia when it invaded Ukraine on February 24. Aviation consulting firm Ishka estimates that the foreign-owned planes are worth $12 billion, nearly half of that by Irish-based lessors, the Associated Press reported.

¡°We are in uncharted territory. We don¡¯t know if they will see these aircraft again,¡± Helane Becker, an aviation analyst for financial-services firm Cowen, told AP. ¡°Our guess is that (Russian carriers) use up whatever parts they have and then start cannibalizing (parts) to keep aircraft flying, and when this is over everything gets sorted out.¡±

123RF

According to aviation consultant IBA, the company with the most exposure to the war is Dublin-based AerCap, with 152 planes valued at nearly US$2.4 billion that are flying, parked or stored in Russia or Ukraine.

There are more than 100 aircraft-leasing companies, many of them too small to survive if they lose more than one or two planes, according to Vance Hilderman, CEO of AFuzion, an airline consulting firm based in Los Angeles.

¡°In the old days, Russia would kind of let you in. You¡¯d bring a couple pilots in and you would repossess the aircraft at night, kind of undercover,¡± Hilderman said. ¡°But this is going to spur a whole new business of cat and mouse. The stolen aircraft won¡¯t be leaving Russian airspace.¡±

For the latest from trending, click here.