Cloudy skies for foreign planes hit by sanctions

LONDON－The fate of hundreds of planes leased by Russian airlines from foreign companies grew murkier on Monday after Russian President Vladimir Putin signed a law letting the airlines register those planes and continue flying them.

Russian state media said the law will let Russian airlines keep their fleets and operate foreign planes on routes within Russia.

Many of the planes used by Russian airlines are leased from foreign companies, including several in Ireland, a member of the European Union. Last month, the EU banned the sale or leasing of planes to Russia as part of sanctions. It gave leasing companies until March 28 to end current contracts in Russia.

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 that they could be repossessed.

Separately, sanctions prevent Western companies from providing spare parts and maintenance to Russian airlines, and analysts say it is unclear whether the planes are insured anymore.

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 the conflict started on Feb 24. Aviation consulting firm Ishka estimates that the foreign-owned planes are worth $12 billion, nearly half of that by Irish-based lessors.

"We don't know if they will see these aircraft again," said Helane Becker, aviation analyst for financial services firm Cowen. "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."

Aviation consultant IBA said the company with the most exposure to the conflict is Dublin-based Aer-Cap, with 152 planes valued at nearly $2.4 billion that are flying, parked or stored in Russia or Ukraine. A spokeswoman for AerCap said 5 percent of its fleet by value is in the hands of Russian carriers.

A spokesman for another Irish lessor, SMBC Aviation Capital, said the company has 35 planes in Russia－IBA valued them at about $1.4 billion－and has issued termination notices for all leases with Russian airlines. The spokesman said the company "is engaged with all relevant authorities", but declined to comment further.

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

Sanctions are also affecting the world's two leading aircraft manufacturers, Boeing in the United States and Europe's Airbus.

Agencies Via Xinhua