Sanctions put in place in response to Russia’s invasion of Ukraine caused the country’s airlines to lose 79 of their commercial aircraft, or nearly 10% of their combined fleets.
Sanctions imposed by several countries require the international aircraft leasing companies that own the planes to take them back by the end of March. All of the repossessed planes were outside of Russia at the time, and the leasing companies either repossessed them or began the process to do so in court, according to Cirium, an aviation analysis firm that tracks information about aircraft in the world.
When Russia invaded Ukraine on February 24, Russian air carriers operated 861 commercial aircraft, both passenger and cargo, Cirium said. Just over half of these planes, with an estimated market value of $9.2 billion, belonged to non-Russian leasing companies.
The Russian aviation industry depends on planes built in the West by companies such as Boeing and Airbus, but the planes are mainly owned by American and European leasing companies. The United States and most of Europe closed airspace to Russia almost immediately after the invasion, and most of the aircraft in question remained in Russia or soon returned there.
The Kremlin announced last month that it was nationalizing all planes that leasing companies tried to repossess and took title to nearly 500 planes that were in Russia.
Most major leasing companies, including Air Lease Corp (AL), Aviation Capital Group, Avolon and SMBC Aviation Capital, declined to comment on the planes they had taken over or Russia’s actions to nationalize planes still in Russia. .
Even some leasing companies in countries that have not imposed sanctions on Russia, such as China and the United Arab Emirates, are preparing to repossess as many planes as they can. That’s because planes that remain under Russian control have been rendered essentially worthless due to other sanctions imposed by Europe and the United States, said Richard Aboulafia, chief executive of AeroDynamic Advisory.
These sanctions force aircraft manufacturers Boeing (BA) and Airbus (EADSF), as well as engine manufacturers such as General Electric (GE), to stop supplying Russian air carriers with spare parts and technical assistance. Russia has indicated that it will maintain these planes in-house, but the lack of authorized parts and maintenance means other countries will refuse to recognize the airworthiness certification these planes need to fly outside of Russia. Russia.
He said it made sense that Chinese and Arab leasing companies would want to repossess their Russian planes if they can, even if there were no sanctions forcing them to do so.
According to Aboulafia, it is also likely that many jets will be cannibalized for parts to keep some planes in the air, a move that would turn Russia’s aviation industry into “the biggest chop shop in the world”.
Chinese and Arab leasing companies also want to maintain good relations with aircraft manufacturers so that they have no problems buying planes for their customers outside of Russia.
According to a Reuters report, a Russian cargo plane belonging to BOC Aviation, a subsidiary of Singapore-based Bank of China, was flown in from Hong Kong and picked up once it landed in California. Although Chinese companies don’t want to confront Russia directly, Aboulafia said, they seek to stay in the good graces of the global aviation industry.
“China is clearly preparing to support its Russian friends [by not imposing its own sanctions], but friendship only goes so far,” he said. “That’s business.”