Russia explores buying stranded jets from Western leasing firms

  • About 400 jets worth $10 billion were stranded during the war.
  • Aeroflot offered $644 million for 17 planes.
  • The Russian plan will use its national wealth fund.
  • Resources that require EU approval have not yet arrived.

Dublin/London; Dec 22 (Reuters) – Russian airlines are in talks with at least one Western leasing company to use state funds to buy more than 400 planes stranded in Russia after the invasion of Ukraine, according to documents. Resources.

The proposal, which would require EU approval and test a compromise in the economic war between Moscow and the West, could reduce the multibillion-dollar bill facing lessors and insurers and give Russian airlines legal ownership of planes at a discount. .

A Russian aviation source said the proposal was still being discussed, but some Russian officials were pessimistic about getting EU approval.

An EU official familiar with the discussions on the matter declined to comment.

Before Moscow launched its special operations in Ukraine, Russia was a key market for aircraft lessors who bought jets from Boeing ( BA.N ) and Airbus ( AIR.PA ) and leased them to Russian airlines that wanted to avoid them. Upfront costs and the purchase of the flights themselves cannot be changed.

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But after Western sanctions forced lessors to cancel those contracts, Moscow refused to allow planes to take off, leaving $10 billion worth of planes stranded in Russia and claims by lessors against their insurance companies.

Russian airlines continue to operate many jets, but some are struggling to secure replacement parts.

Details of discussions between Russian airlines and one of the lessees have emerged in an Irish court where major lessees are suing insurers including Lloyd’s of London ( SOLYD.UL ) to pay their claims.

AerCap (AER.N); Whether SMBC Aviation Capital and Avolon are in talks to pay for jets from Russian airlines?

The EU sanctions, which apply to Ireland, where most of the leased aircraft are registered, have banned the supply of aviation technology to Russian entities and set a March 28 deadline to terminate contracts.

that any lessee operating in a regulated sector has in any way breached the sanctions; Industry figures do not suggest they are exploring all options in an unprecedented situation.

Russian funds

Russia’s support for the talks was demonstrated in an August 30 letter from its transport ministry to 23 airlines.

“In the purchase of aircraft by foreign lessees, submit information on each aircraft proposed to be purchased using the resources of the National Treasury,” the letter said.

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It also requested “information that there is an agreement with the lessors and insurance companies on a plan to buy back the aircraft.”

The ministry did not respond to a request for comment.

The world’s No. 2 lessor SMBC said in a letter to the Irish High Court issued on Sept. 15 to Aeroflot ( AFLT.MM ) and Aeroflot’s insurer AlfaStrakhovanie.

It was suggested that AlfaStrakhovanie had approached Aeroflot to explore the possibility of making ex gratia payments to SMBC AC to settle insurance claims. Court media.

The payment was “reimbursement for the transfer of aircraft ownership to a Russian insurance company or its nominee,” the letter, first reported by Irish publication The Currency, added.

AlfaStrakhovanie of SMBC, which has written down $1.6 billion for 34 jets, offered $644.2 million for 17 planes leased to Aeroflot on Sept. 2, having already paid $82 million in deposits and reserves, the letter said.

This is much less than the total agreed value for the aircraft, SMBC said in the letter.

SMBC said in the letter that it was approached by Elbrus Insurance Brokers LLC on behalf of Russian airline NordStar and separately by airline S7 to “discuss possible claim solutions.”

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Aeroflot AlfaStrakhovanie, Elbrus, NordStar and S7 did not respond to requests for comment.

EU lobbying

In its letter, SMBC said that the withdrawal from Article 3C of Regulation 833/2014, in particular, involves lobbying the EU to facilitate the agreement.

Such a downgrade would “enable EU lessees to obtain approval to transfer ownership of previously leased aircraft to Russian lessors or their Russian insurers,” it said.

Ross Denton, head of international trading firm Ashurst, said that lessees could improve safety by letting them use extra equipment under the agreement.

But any deal faces huge legal and diplomatic hurdles, and talks are premature, a Western finance official said.

“Right now it’s going to be an obvious contradiction of sanctions – why are governments suddenly agreeing to this?” A senior official said on condition of anonymity.

Conor Humphries Gleb Stolyarov, Reporting by Carolyn Cohn and Tim Hepher; Additional reporting by Jan Strupczewski. Written by Conor Humphries, edited by Alexander Smith.

Our Standards: Thomson Reuters Trust Principles.

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