The fate of hundreds of planes leased by Russian airlines from foreign companies grew murkier on Monday after Vladimir Putin signed a law letting the airlines register those planes and continue flying them.
Russian state media said the law will let Russian airlines keep their fleets and operate foreign planes on routes within Russia.
Many of the planes used by Russian airlines are leased from foreign companies, including several in Ireland, a member of the European Union.
Last month, the EU banned the sale or leasing of planes to Russia as part of sanctions to punish the invasion of Ukraine. It gave leasing companies until March 28 to end current contracts in Russia.
Last week, Russia’s air-transport agency advised airlines with foreign-registered planes not to take them out of the country because of the risk they could be repossessed.
Separately, sanctions prevent western companies from providing spare parts and maintenance to Russian airlines, and analysts say it is unclear whether the planes are insured anymore.
Various estimates place the number of foreign-owned planes operated by Russian airlines at around 500 or more, and the vast majority of them were inside Russia when the war started on February 24.
Aviation consulting firm Ishka estimates that the foreign-owned planes are worth 12 billion dollars, nearly half of that by Irish-based lessors.
“We are in uncharted territory. We don’t know if they will see these aircraft again,” said Helane Becker, an aviation analyst for financial-services firm Cowen.
“Our guess is that (Russian carriers) use up whatever parts they have and then start cannibalising (parts) to keep aircraft flying, and when this is over everything gets sorted out.”
According to aviation consultant IBA, the company with the most exposure to the war is Dublin-based AerCap, with 152 planes valued at nearly 2.4 billion dollars that are flying, parked or stored in Russia or Ukraine.
A spokeswoman for AerCap said 5% of its fleet by value is in the hands of Russian carriers. She referred to a February 28 filing in which the company said it would comply with the wind-down of leasing planes to Russian airlines, and declined to comment further.
A spokesman for another Irish lessor, SMBC Aviation Capital, said the company has 35 planes in Russia — IBA valued them at about 1.4 billion dollars — and has issued termination notices for all leases with Russian airlines. The spokesman said the company “is engaged with all relevant authorities,” but declined to comment further.
Other companies declined to comment or did not immediately respond.
There are more than 100 aircraft-leasing companies, many of them too small to survive if they lose more than one or two planes, according to Vance Hilderman, CEO of AFuzion, an airline consulting firm based in Los Angeles.
“In the old days, Russia would kind of let you in. You’d bring a couple pilots in and you would repossess the aircraft at night, kind of undercover,” Mr Hilderman said.
“But this is going to spur a whole new business of cat and mouse. The stolen aircraft won’t be leaving Russian airspace.”
Mr Hilderman said that for the few remaining flights that leave the country — to Turkey and places in the Middle East and Asia — Russian airlines will only use planes that they own or lease from Russian lessors.
Ms Becker, the Cowen analyst, said the law that Mr Putin signed violated a decades-old treaty called the Chicago Convention that allows lessors to cross international borders and take back planes from defaulting customers.
