Analysis: Pandemic jet deals in spotlight as Airbus axes Russia delivery

In the final hours of 2021 Airbus officially delivered two A350s to Russia's Aeroflot, helping the jetmaker meet annual delivery targets. Months later, the jets remain in French storage limbo after sanctions forced Airbus to abandon physical handover. The setback sheds new light on workarounds used by the European planemaker under prevailing accounting rules to support deliveries during the pandemic, as well as the scramble to hit targets at the close of each year, industry sources said. Airbus reached delivery targets during the crisis, in part due to auditor-approved deals that allowed carriers to delay accounting for some new planes on certain conditions. The use of such acceptance and delivery agreements (ADA) to smooth deliveries was revealed by Reuters in July. Industry sources say the system was used for as many as 10-15% of deliveries at the height of the pandemic as the world's largest planemaker fought to contain a drop in deliveries at a time of severe shock for the industry. But the arrangement has fallen under the spotlight after sanctions against Russia interrupted the choreographed handover sequence. Airbus declined to comment on contractual details or on whether other ADA deals may be disrupted. Even in ordinary times, a delivery spans 4-5 days of tests and paperwork, according to a recent Airbus filing. Last on the list before jets fly away is "Transfer of Title" or ownership. Under the ADA agreements, the process can stretch out for months after deliveries are announced, the sources said. Airlines must pay everything owed except for a token four-figure sum on a $50-150m jet - enough to ring up a sale and record a delivery for Airbus auditors, but just short of the final tally needed to hand formal ownership to the airline. The advantage for Airbus is that it is able to book the revenue due on delivery, while the airline can delay taking the jet for 3-6 months and pause costly charges like depreciation.<br/>