How many leased aircraft have been recovered from Russia by aircraft leasing companies?
In addition to well-publicised airspace closures, a broad range of economic sanctions effecting aviation have followed the Russian invasion of Ukraine. One notable directive placed on the aviation industry was a European Union mandate, ordering aircraft lessors to end their lease agreements with Russian carriers by March 28th 2022. This short timeframe has proved an immense challenge for lessors across the industry to recover their aircraft from Russia, with increased airspace restrictions further complicating the process. Using our aviation intelligence platform InsightIQ, IBA's experts have examined how many aircraft have been recovered so far, and the likely implications for the aircraft that remain in Russia.
IBA has been actively tracking the number of foreign-managed Russian-operated aircraft since the onset of the Ukraine crisis. InsightIQ reveals the number of foreign-managed aircraft operated by Russian carriers decreased from 513 to 484 aircraft between the start of the conflict and the EU lease termination deadline of March 28th. Over 400 of these aircraft are currently located in Russia, making it increasingly more difficult that lessors will be able to recover many more leased aircraft.
32 aircraft managed by non-Russian lessors have left Russian operators since the invasion. 29 of these have been returned to their respective lessors. The remaining 3 aircraft were initially on sub-lease to Russian carriers, and have now been returned to their original non-Russian lessees. There are likely several aircraft currently in the process of being returned to their lessors, and as such we expect exposure to reduce further progressing into May 2022.
Aercap has had the most success in recovering aircraft and reducing their exposure in Russia, having recovered a total of 8 aircraft. Lessors Air Lease Corporation and Aircastle have also recovered 3 aircraft each. Most of these are Boeing aircraft, including 6 x Boeing 777-300ER and 6 x 737-800 jets. Newer generation models such as the A320neo also feature, alongside a range of freighter aircraft from the Boeing 747 family.
Despite the termination of lease agreements, nearly 300 aircraft were identified as active during the third week of April 2022, mostly operating on domestic routes inside Russia. This represents around 60% of foreign-owned Russian-operated aircraft. This high level of operations has been helped by a new law allowing aircraft to be placed on the Russian register, passed by the Kremlin in April 2022. This circumvents steps taken by territories including Bermuda and Ireland to suspend airworthiness certificates for these aircraft, in violation of international law.
With dwindling hope of recovering their assets back coupled with the uncertainty on the re-marketability of their assets locked up in Russia, lessors have begun filing insurance claims amounting to billions of dollars. One such case has been from lessor AerCap, which recently filed insurance claims worth US$ 3.5 billion for its leased fleet stuck in Russia.
Our recent analysis revealed that the lack of spare parts will begin to have a significant impact on the Russian commercial fleet in the next 6 to 12 months. Contemporary aircraft such as the Airbus A350 may be further limited by software issues as licences expire and are not renewed.
It is likely that the Ukraine crisis will continue to prove a significant challenge for lessors and the wider aviation industry, even when the conflict subsides. The resulting three-way dispute between lessors, insurers and airlines may continue for years to come.
We continue to monitor the Ukraine Crisis and its unfolding effects on global commercial aviation. For further insight, feel free to contact us to speak to one of IBA's experts.
IBA's InsightIQ analysis platform flexibly illustrates multiple asset, fleet and market positions, actual and potential, to inform client choices and identify acquisition opportunities. Immediate access to crucial aircraft, engine, lease rate and fleet data eases appreciation of historic and future aircraft concentrations and operator profiles.
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