Search Cheap Flights and hotels
Russian airlines will keep planes leased from foreign firms.
Russian president Vladimir Putin signed a law on Monday allowing foreign planes leased by Russian airlines to be registered as the airline’s property.
The move is likely to stoke Western fears of a mass default involving hundreds of jetliners.
The aircraft value leased to Russian airlines is estimated to be in the tens of billions of dollars.
Irish-owned aircraft leased to Russian airlines alone is estimated to be between €3.5 billion and €4.5 billion, making the Irish industry one of the worst-affected by the crisis.
The company with the most exposure to the new law is Dublin-based AerCap, with 152 planes valued at nearly 2.4 billion dollars that are flying, parked or stored in Russia or Ukraine.
Check prices and Book Cheap flights and hotels Now
“We are in uncharted territory. We don’t know if they will see these aircraft again,” said Helane Becker, an aviation analyst for financial-services firm Cowen.
“Our guess is that (Russian carriers) use up whatever parts they have and then start cannibalising (parts) to keep aircraft flying, and when this is over everything gets sorted out.”
Last month, the EU banned the sale or leasing of planes to Russia as part of sanctions to punish the invasion of Ukraine. It gave leasing companies until March 28 to end current contracts in Russia.
Even if Russia did want to make payments on their leased planes, it would pose a challenge in doing so as the country is expelled from the SWIFT banking system.
Experts predict the expected wave of insurance claims from lessors will spark a decade-long court battle struggle with insurers as to whether or not war-risk insurance will pay out.
