Three airlines agreed with the Ministry of Transport to allocate funds from the National Welfare Fund for the re-registration of aircraft from foreign ownership to Russian

As Kommersant found out, three carriers – Aeroflot, Ural Airlines and iFly – agreed with the Ministry of Transport to receive funds from the National Welfare Fund for the re-registration of 40 aircraft from foreign ownership to Russian. According to analysts, the insurance settlement for these liners will require 80-96 billion rubles. At the same time, companies will be required to send all their net profit for 2022 to these transactions. In a significant way, this requirement will affect only S7, which so far continues to coordinate with the Ministry of Transport and foreign owners. Utair, according to Kommersant, decided to do without state funding.

According to Kommersant, at the moment, three airlines – Aeroflot, Ural Airlines and iFly – have previously agreed with the Ministry of Transport on the allocation of funds from the National Welfare Fund for the purchase of aircraft from Western lessors. The corresponding meeting took place at the end of last week, a Kommersant source in the Ministry of Transport told Kommersant. Aeroflot agreed to buy 18 aircraft from the Irish AerCap, Ural Airlines – 19 aircraft from various owners, iFly – three Airbus A330s from the American Air Lease Corporation. Aeroflot at the beginning of the summer planned to receive at least 47 aircraft, but, according to the interlocutor of Kommersant, “an extremely delicate process of approvals” continues.

The key incentive for re-registration of aircraft from foreign ownership to Russian ownership is the possibility of their withdrawal from the registers of Bermuda and Ireland, which will allow them to fly abroad.

As of March 13, 2022, Russian airlines operated 721 aircraft registered in the Bermuda Register (BCAA), by the end of the year there were 520 of them (see “Kommersant” dated December 9, 2022), and at the end of June 2023 – 475.

Russian airlines are hoping to settle accounts with Western aircraft owners as part of an insurance settlement that is allowed under EU sanctions (see “Kommersant” dated July 24). In the case of US companies, we can also talk about direct buyout. In any case, a license from the US Department of the Treasury (OFAC) is required for the transaction. These licenses for most transactions were issued for three months and are valid until the end of September.

The listed airlines have everything ready for settlements, while others have not yet completed all the approvals. So, according to Kommersant’s interlocutor in the Ministry of Transport, S7 does not plan to “give up the possibility of state funding.”

However, the source of Kommersant in the ministry continues, the company “is still in the process of coordination, although it entered the process earlier than the others.” “S7 plans to buy aircraft from foreign lessors and is preparing applications for submission to the commissions of the Ministry of Transport and the government,” he said. According to another Kommersant source, in applications to the Ministry of Transport, carriers cite the estimated number and age of aircraft, the terms of transactions for which they managed to agree, their cost, as well as justifications, such as the social significance and demand for routes on which these aircraft will be operated.

Utair, according to Kommersant’s interlocutor, was able to agree on the re-registration of nine of its Boeings and “decided to raise funds on its own.”

The attractiveness of state funding reduces the new requirement of the Ministry of Transport: if an airline received subsidies for transportation in 2022 and at the same time received a net profit at the end of the year, then it must allocate all of it to finance transactions with foreigners. S7’s net profit for 2022 exceeded 34 billion rubles, and the airline received almost 23 billion rubles as part of the subsidy for passenger traffic alone. Utair also received subsidies and ended the year with more than 4 billion rubles. net profit. Aeroflot will not be affected by the requirement, as it received 40.5 billion rubles. loss under RAS for 2022 (excluding adjustment for the new lease accounting standard).

In the Ministry of Finance, Kommersant’s questions were forwarded to the Ministry of Transport. The Ministry of Transport, the Federal Air Transport Agency and the press services of the top 5 airlines did not respond to Kommersant. In Ural Airlines, which received 13.5 billion rubles in 2022. net profit and 9.5 billion rubles. for domestic passenger traffic, declined to comment. Contact iFly, which received almost 690 million rubles. loss, failed: all six of the carrier’s aircraft, of which five are flying, remain in dual registration, leaving it without overseas flights.

Many airlines, according to Kommersant, were also initially embarrassed by the fact that all aircraft would be issued to the leasing NLK-Finance, controlled by the Federal Air Transport Agency.

The terms of leasing from NLK-Finance are still unknown. According to Kommersant’s interlocutor in the Ministry of Transport, the meeting participants were never provided with a draft resolution that would regulate the distribution of funds, the procedure for payments, or the right to use aircraft. Now, according to Kommersant’s information, such a document exists only for transactions with the Aeroflot fleet. Other carriers were worried that by the end of September they would not have time to receive the parameters of contracts with the lessor and specific conditions for co-financing from the National Welfare Fund. According to another interlocutor of Kommersant, close to the Ministry of Transport, the document “is going through the final stages of approval.” Draft agreements between operators and NLK-Finance, according to the interlocutor of Kommersant, “will be worked out after solving the primary task – determining the procedure for co-financing transactions from state funds.”

The cost of 18 Aeroflot medium-haul aircraft, according to Elena Sakhnova, an analyst for the My Investments channel, could range from 45 billion to 53 billion rubles. 19 Airbus “Ural Airlines” can be estimated at 28-33 billion rubles. The expert estimates three A330 iFly at 9-10 billion rubles. Thus, in total we are talking about 82-96 billion rubles.

300 billion rubles are provided for the purchase of aircraft. from the FNB, but perhaps no more than 100 billion rubles are available now. Some of Kommersant’s sources on the market reported that Aeroflot purchased ten long-haul Boeing 777s and eight Airbus A330s with funds from the National Welfare Fund. All of them were not in operational, but in financial leasing, and at the end of 2022, the EU authorities allowed such contracts to be terminated ahead of schedule. According to Kommersant’s interlocutors, Boeing cost 90-100 billion rubles, Airbus – 55 billion rubles. However, a Kommersant source close to Aeroflot objects that the group purchased the A330 “at its own expense” and only Boeing was issued at NLK-Finance. He also insists that the total amount of transactions given by Kommersant’s analysts and sources was one and a half to two times lower.

Aigul Abdullina