Aviation

The Kremlin offers Russian airlines to buy captured Western planes

The Russian government has asked local airlines to consider the idea of ​​buying domestically operated Airbus and Boeing aircraft from their Western lessors with money from the National Welfare Fund (NWF). Russian carriers continue to operate nearly 740 regional and commercial airliners owned by foreign lessors but forcibly kept in the country by order of the Kremlin.

The Ministry of Transport sent a letter on this topic to 20 key carriers. The airlines’ responses will help determine the feasibility of the plan.

In March, Transport Minister Vitaly Saveliev asked the Russian government to make a decision on the purchase of approximately 500 foreign-made aircraft worth $20 billion from foreign lessors and banks. At the same time, he acknowledged difficulties with potential transactions due to restrictions on financial transactions with Russia imposed by the US and the EU.

The NWF will borrow money at a rate of 1.5 percent for a 15-year term. The airlines would have to repay the loans as a special measure to resolve ongoing disputes with foreign lessors. The Ministry recognizes the potential difficulties associated with embedded risks and remittances if all stakeholders agree to the proposed plan.

The minister’s letter also asks airlines to provide an estimate of the residual value of the leased jets in their fleets and to provide an opinion on whether it makes sense to purchase aircraft over 20 years old.

If the plan is implemented, its practical implementation, most likely, will not go beyond 500 aircraft due to restrictions on financial transactions with Russian state and commercial structures, introduced by the USA, the EU and their allies around the world. The EU has allowed European lessors to deal with Russians only under finance lease contracts signed before the Russian invasion of Ukraine on February 24. However, Russian airlines have taken most of the Airbus and Boeing aircraft on operating lease terms. They purchased only 50 airliners under financial leasing. However, Russian interests hope that Washington and Brussels will consider a waiver to resolve the issue.

In a separate step, the Ministry of Transport made “amendments” to its previous decision on subsidies intended to cover operational losses of Russian carriers as a result of military operations in Ukraine.

In March, President Vladimir Putin stated the need to subsidize local carriers. After about three months, the ministry selected 32 suitable airlines. After analyzing their responses, the authorities decided to cut the initial budget of 100 billion rubles ($1.63 billion) for the whole of 2022 by about 3 billion rubles for each summer month, as airline losses were smaller than expected. Aeroflot, which was promised subsidies of almost 50 billion rubles, continues to receive them without correction.

https://www.ainonline.com/aviation-news/air-transport/2022-09-22/kremlin-proposes-russian-airlines-buy-seized-western-jets The Kremlin offers Russian airlines to buy captured Western planes

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