The war between Russia and Ukraine is having serious consequences on the airline industry.
After several international companies stopped their activity in Russian territory, hundreds
of planes have been stranded waiting to be recovered.
Analysts at data and analytics company Russell Group have reported that Western-built aircraft
with a market value of approximately $13 billion are currently on the ground in Russian airports.
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And in today's video, we are going to talk about “Aircraft STRANDED in Russia!”
So without any further ado, Let's begin.
Flights to and from Russia have been banned by nearly all Western nations in response
to the country’s widely-condemned invasion of Ukraine.
The problem stems from the fact that Russia has no intention of returning them after the
sanctions imposed by the West.
The Russian President has openly mentioned the possibility of nationalizing the assets
of foreign companies.
According to the consulting firm IBA, Russia owns 523 aircraft that other Western companies
had leased to Russian airlines, of which 101 are in the possession of S7 Airlines and 89
to Aeroflot.
Both companies have stopped flying internationally, thus eliminating any possibility of these
aircraft stepping on the ground outside Russian borders.
The world's top aircraft lessor, AerCap, submitted an insurance claim last month for more than
100 jets stuck in Russia following the invasion.
Aggravating the problem for lessors like Aercap is a new Russian law that allows Russian airlines
to re-register the planes and keep flying them.
AerCap is the largest owner of commercial aircraft globally and the most active aircraft
trader, with around 1,750 planes on its books.
Lessors say the new Russian laws contravene international aviation agreements and equate
to theft - and that's setting off a chain of insurance claims.
Aercap shares have lost about a quarter of their value since the EU banned companies
from supplying Russia with aircraft, parts, or services in response to the invasion of
Ukraine.
Kroll Bond Ratings said it may downgrade nine aviation asset-backed securitizations exposed
to planes in Russia and Ukraine.
AerCap has leased a total of 135 planes and 14 engines to Russia, but only 22 aircraft
and three engines have been returned.
In a statement, Air Lease Corporation said: “The company has determined that it is unlikely
that the company will regain possession of the aircraft that have not been returned and
that remain in Russia, which represent 21 aircraft in the company’s owned fleet and
six aircraft in the Company’s managed fleet.
“On 19 April 2022, in connection with the preparation and review of the company’s
quarterly financial statements for the quarter ended 31 March 2022, the Company determined
that it expects to record a write-off of its interests in its owned and managed fleet that
remains in Russia, totaling approximately $802.4m.
“The Company does not expect that the write-off of these assets will result in material future
cash expenditures for the Company.”
In another case reported by The Air Current, an Airbus A321neo on its way to Cairo had
its airworthiness certificate revoked by authorities in Bermuda mid-flight after it lost its insurance.
Its owner, lessor SMBC Aviation Capital, attempted to repossess the plane after it landed but
it was able to return to Moscow, the outlet said.
Russia is a signatory to the Cape Town Convention, but that seems to have been written in disappearing
ink.
Interestingly, though, the 500 or so planes seem not to have been formally nationalized.
Even if Russia made payments for taking them, people in the trade (and their insurers) tell
that receiving payment from sanctioned entities or countries requires special permission from
regulators.
Nobody wants to be making such requests in the current circumstances.
Russia’s invasion of Ukraine will likely have significant fallout in the capital markets,
AM Best says, with impacts for the entire industry expected in the short-to-medium term.
Rating agencies have already turned negative on insurance and reinsurance companies operating
in Russia, while firms operating in Western nations such as the UK and the US are likely
to face “significant” but “manageable” impacts due to the sanctions.
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