Aircraft leasing giant questions leasing to Russian airlines

An Airbus A321-211 of Russian airline Aeroflot with the registration VP-BOE is pictured at a long-term parking lot at Cointrin airport in Geneva, Switzerland, March 9, 2022.

Denis Balibouse | Reuters

The CEO of major aircraft rental company Avolon on Tuesday accused Russia of “theft” after President Vladimir Putin’s government seized several leased planes.

The ordeal will have lasting impacts on the company’s relationship with the country, chief executive Domhnal Slattery said, casting doubt on whether the second-largest aircraft lessor would again do meaningful business with Russian airlines.

“We try every day but from today [there is] no chance of getting them back now,” he said.

Western aircraft leasing companies are attempting to recover hundreds of planes from Russia. They were held under sanctions to protest Russia’s attack on Ukraine to break contracts with Russian customers.

But Putin signed legislation earlier this month that would allow the country’s carriers to fly the planes domestically and re-register them, clouding the prospects of them being picked up by foreign owners. Some $10 billion worth of foreign-owned planes that have been leased to Russian carriers are stuck in the country.

“It’s just theft. They stole the planes. It’s incomprehensible,” Slattery said.

Avolon, which is based in Dublin, had 14 aircraft placed in Russia and recovered four. He now has a net exposure of around $200 million, Slattery said. He likened it to a “headache, not a migraine” for the firm, which had more than 800 planes at the end of last year.

“It’s still going to be a very, very long time, if we ever fancy additional exposure” in Russia, Slattery said.

The leased planes are essential for Russia’s fleet of more than 970 planes, including about 500 managed by a foreign owner, according to aeronautical data and consulting firm Cirium.

Slattery said the crisis in Russia will impact the insurance market, particularly by driving up war risk costs.

Avolon rival AerCap, also based in Dublin, will hold a quarterly call to discuss the results on Wednesday morning.

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