Officials in Russia had until Monday to return aircraft leased to the country by companies in EU nations, but many have already given up their planes as lost causes. Especially after President Putin signed a law allowing airlines to register leased aircraft as Russian in defiance of international law.
Russia leases most of the aircraft that operate in its fleet from the rest of the world. Those contracts dissolved as sanctions against the country over its invasion of Ukraine mounted, leaving over 400 airplanes in legal limbo. Companies recalled their aircraft and Russia just kept flying them. Putin made it clear they were going to hold on to the planes. It seems to be a mass theft of historic proportions. From Reuters:
Aviation was an early business casualty of Moscow’s invasion of Ukraine, as the West and Russia imposed tit-for-tat airspace bans. Now, lessors face big writedowns or a long insurance battle as the March 28 deadline looms for terminating plane leases under European Union sanctions.
“I’m afraid that we are going to witness the largest sort of theft of aircraft in the history of commercial civil aviation,” said Volodymyr Bilotkach, an associate professor of air transport management at Singapore Institute of Technology.
Dual registration is not allowed under international rules, but Russia has already moved more than half of the foreign-owned aircraft to its own registry after passing a law permitting this, Russia’s government said on Wednesday. read more
The government also said 78 planes leased to Russian carriers had been seized while abroad and would not fly back to Russia, Interfax news agency said on Tuesday. read moreMajor aircraft lessor Avolon has terminated all its Russian airline leases and repossessed four of the 14 owned aircraft on lease with Russian airlines outside the country, a source familiar with the matter said on Friday.
Even if the over 400 aircraft were returned, it’s unclear if they would hold their original estimated $10 billion value. Commercial aircraft require detailed maintenance records to prove every part used is traceable and genuine. Considering Russia hasn’t had access to such parts since the invasion began and the planes haven’t stopped flying in that time, the entire fleet may already be a loss.
Some private Russian airlines have signaled they’d like to return the aircraft, but it’s unclear if the Russian government would approve the action. Russia’s UTair Airlines withdrew nine Boeings from service on March 14. The planes haven’t flown since then, but remain in Russia. Another 78 planes leased to Russia have been seized in foreign airports.
As for the lessors of the aircraft, they are likely out millions of dollars in the near term, as such massive insurance payouts will take years to work through the courts.