The Russian government has transferred more than 50 per cent of foreign aircraft to Russia's own registry as it takes measures to start using foreign aircraft located in Russia, prime minister Mikhail Mishustin said on Wednesday.
Mr Mishustin said hundreds of foreign aircraft had already been moved to the Russian registry, stressing that the key task was to ensure the safety of flights.
Sanctions have disrupted the supply of most aircraft, parts and services to Russia. Russian airlines have 515 jets leased from abroad.
Russia has passed a law allowing the country’s airlines to place aircraft leased from foreign companies on Russia’s aircraft register.
On Tuesday, the Irish Aviation Authority confirmed that a number of Irish-registered aircraft leased to Russian airlines had been re-registered in Russia in breach of an international aviation treaty.
Russia has offered to compensate owners of jets commandeered by the country – a bid to smooth relations with leasing companies that stand to lose billions of dollars on rented aircraft they can’t get back. Irish lessors are among the most exposed.
Authorities in Moscow are seeking ways to legally get round sanctions requiring international firms to recall the planes, transport minister Vitaly Savelyev said. Options include payments or an outright purchase of the jets, he said. Lessors have so far been unwilling to negotiate on the matter, according to Mr Savelyev. That's most likely because any financial accord with Russian airlines would appear to present a clear breach of the sanctions.
"We are not losing hope but we are not giving them back, because that would mean to leave oneself without aviation," Mr Savelyev said. Leasing firms doing business in Russia have demanded the return of hundreds of Airbus and Boeing planes to comply with economic sanctions imposed by the European Union and US in response to the invasion of Ukraine. Under EU rules, they have until March 28th to cancel contracts, but have no way of repossessing the aircraft after Russia moved to keep them within its borders.
Dublin-listed AerCap Holdings, the world's biggest lessor with more than 150 planes in Russia, traded 2.8 per cent higher in early New York trade. Still, it's down 12 per cent from the last trading day before the invasion.
Lessors stand to lose as much as $10 billion as the value of their fleet in Russia declines. The purchase offer would ease the impact and give Russian airlines a potential pathway for re-establishing business ties after the crisis passes. But moving forward would put foreign lessors at risk of being penalized by authorities in the US, EU or other jurisdictions. – Reuters, Bloomberg