Hundreds of Russia plane leases to be axed after Western sanctions

Aircraft leasing firms are set to terminate hundreds of leases with Russian airlines following Western sanctions over the invasion of Ukraine here that give the sector a month to act. Dublin-based AerCap, the world’s biggest aircraft leasing company, saw its New York-listed shares tumble 12.7% after it said it would cease leasing activity with Russian carriers, while U.S.-based Air Lease fell almost 8%. Russian airlines have 980 passenger jets in service, of which 777 are leased, according to analytics firm Cirium. Of these, two-thirds, or 515 jets, with an estimated market value of about $10b, are rented from foreign firms. AerCap said that by net book value, 5% of its fleet was leased in Russia as of Dec. 31. The company, which recently strengthened its leadership of the specialist aviation leasing industry by buying rival GECAS, has the largest exposure to Russia and Ukraine with 152 planes, consultancy IBA said. Its Russian clients include Aeroflot, S7 Airlines, Rossiya, Azur Air and Ural Airlines, its website showed, involving aircraft worth an estimated $2.5b, according to aviation services firm ACC Aviation. Leasing companies control about half of the world’s fleet and are a vital source of financing for airlines that lack sufficient capital to buy or prefer to pay a monthly rent. The European Union on Sunday gave leasing companies until March 28 to wind up current rental contracts in Russia, presenting lessors with a major new headache hard on the heels of crises over Boeing 737 MAX safety and the COVID-19 pandemic. Russia warned the West it would retaliate against sanctions targeting its aviation industry. Bankers have said Russian airlines have been among the most reliable in paying bills during the pandemic, but leasing companies face the prospect of having to abruptly wind up deals and recover aircraft in an uncertain climate post-sanctions.<br/>