Russia will spend 300 billion rubles on the purchase of aircraft from foreign lessors

The Russian government has allocated about 300 billion rubles. for the purchase of aircraft leased by Russian airlines from foreign lessors. This was stated by Minister of Transport of the Russian Federation Vitaly Savelyev at an expanded meeting of the State Duma Committee on Transport.

“We are trying to buy aircraft from foreign lessors, we understand this issue well, and the government has already allocated about 300 billion rubles,” the minister said. According to him, some of these funds have already been used “Aeroflot» for the purchase of 10 long-haul aircraft (AC). Aeroflot spokesman declined to comment.

In what proportion the allocated funds will be distributed among the airlines, Savelyev did not explain. Vedomosti sent a request to the Ministry of Transport.

In May 2022, Aeroflot bought eight Airbus A330 aircraft from foreign lessors and transferred them to the Russian register. In December 2022, Aeroflot bought ten Boeing 777-300ERs from an Irish leasing company. The press service of the airline noted that Aeroflot will continue to buy aircraft to keep the current fleet of foreign-made aircraft in its own operation.

All 18 purchased aircraft were operated on the basis of financial leasing agreements. According to them, the vessels become the property of the lessee at the residual value after the expiration of the leasing agreements. The remaining aircraft in the group’s fleet are used under operating lease agreements, which involve the return of the aircraft to the lessor after the end of the lease term.

Buying back planes is hampered by the Western sanctions regime. After the start of the NWO in Ukraine, the US and the EU stopped deliveries of civil aircraft and spare parts to Russia, and also obliged their lessors to return the aircraft already leased to Russian operators.

These planes then remained in Russia, and the carriers began to transfer rental payments for them to special accounts in Russian banks. At the same time, the transfer of aircraft from the Bermuda and Irish registers to the Russian one began.

“The question is how technically and legally the buyback will be made and executed: taking into account the sanctions, it is legally impossible to transfer ownership rights today,” says Alexander Lanetsky, CEO of Friendly Avia Support. Since direct payments [от российских контрагентов] are prohibited, then if a foreign lessor is interested, most likely, a scheme will be chosen with the assignment of the rights to claim lease payments to companies from countries with friendly jurisdictions, in order to then transfer these aircraft to Russian owners, a partner at the law firm Rustam Kurmaev and Partners explained to Vedomosti earlier Dmitry Gorbunov.

As of April 2022, there were 1,287 aircraft in the fleets of Russian airlines, of which 1,101 were passenger aircraft. According to Savelyev, 1,167 aircraft are currently in service, and none of them have been cannibalized (i.e., largely dismantled for spare parts). There are spare parts for the aircraft, despite the complicated logistics, the official reassured those present at the meeting.

According to the minister, the average age of the fleet of Russian airlines today is 15 years. “This means that we will maintain airworthiness for another 10 years (the operation of existing aircraft – Vedomosti) and give our Ministry of Industry and Trade time to develop new ultra-modern models and provide us with new domestic aircraft,” Savelyev said.

Lanetsky says that earlier lessors estimated the cost of aircraft remaining in Russia after the imposition of sanctions at $5-10 billion. Thus, 300 billion rubles. ($4 billion at the current exchange rate) – a sufficient amount to buy back part of the aircraft.

The most problematic places in the maintenance of aircraft remain the repair of engines and landing gear, which no one in Russia does, continues Lanetsky. “Scheduled fuselage repairs are carried out every two years. Scheduled engine repairs – once every 10 years. Taking into account the fact that aircraft have been in operation in Russia for more than a year, the engines of most of them will need to be repaired in five years, and some aircraft even earlier,” he summed up.

Oleg Panteleev, Executive Director of Aviaport, says that the competence to repair CFM56 engines for the most popular Airbus A320 and Boeing 737 aircraft will be mastered in Russia “on one scale or another.” S7 Technics has made the most progress in this direction, he notes. Previously, the prospects for mastering the repair of such motors were evaluated at the United Engine Corporation (UEC) of Rostec and UZGA, and it is possible that they will return to the topic of repairing foreign engines or their components, Panteleev believes.

“It is hardly advisable to master the full-scale repair of foreign engines of other types in Russia. Many types of engines are in operation, but the number of units of each name is small,” the expert says. According to him, instead, it is more logical to import single copies or parts of engines to Russia to replace failed turbines.