Jet leasing companies race to pull planes from sanction-hit Russia

Asia-based aircraft leasing companies are scrambling to cut ties with Russian airlines under new sanctions triggered by the invasion of Ukraine, in another blow for a sector reeling from the COVID-19 pandemic. The European Union announced new regulations on the weekend that require plane lessors to terminate their rental contracts in Russia by March 28, a move that reportedly could affect more than 500 jets leased to Russian carriers by foreign companies, including dozens of rented planes from companies backed by Asian investors. Japan's SMBC Aviation Capital has the biggest exposure among Asia-based operators with 36 aircraft rented to Russian carriers, or about 11% of its global fleet, according to calculations by research company CreditSights. Most recently, SMBC delivered four new Airbus A321neo jets to Ural Airlines. Parent company Sumitomo Mitsui Finance and Leasing, which put the share of SMBC's fleet with Russian clients at less than 10%, said on Wednesday that it would "negotiate terms with the Russian airlines" to comply with the deadline set by the EU. While the EU sanctions only apply to companies operating in the bloc's member states, many Asian leasing companies, including SMBC Aviation and BOC Aviation, have substantial operating bases in Europe and would be affected by the rules. BOC Aviation, a Hong Kong-listed unit of Bank of China, told Nikkei Asia that it leases 18 jets to four Russian carriers, including Ural, Aeroflot's budget arm Pobeda and Russia's biggest domestic carrier S7 Airlines. The Russian rentals make up about 4.5% of BOC's global fleet, although CreditSights put that figure at 7%, or 23 planes. Timothy Ross, the company's head of investor relations, said the new sanctions would affect "most of our aircraft in Russia," but he declined to elaborate on the potential impact. By Wednesday's midday break, BOC Aviation shares were down 10% from Monday.<br/>