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Hundreds of Russia plane leases to be axed after EU sanctions -Breaking


© Reuters. BoC Aviation models are seen at their Singapore office in this photo illustration, May 16, 2016. REUTERS/Edgar Su/Illustration

Alexander Cornwell, Jamie Freed

(Reuters] –Lessors have decided to end hundreds of aircraft leases with Russian airline companies following Western sanctions regarding the invasion of Ukraine. The contracts must be cancelled.

Asian Lessee BOC Aviation stated Monday that the European Union’s sanctions would affect most of its Russian aircraft. The leases must be terminated no later than March 28, according to BOC Aviation.

According to Cirium, Russian airlines have 980 passenger planes in use, while 777 of these are leased. With an estimated value of $10 billion, 2/3, 515, of the 980 jets are leased to foreign companies in this mainly Irish industry.

According to IBA, AerCap Holdings is the biggest global leasing company with 152 aircraft.

AerCap stated that it will cease leasing with Russian airlines to comply with sanctions.

Its website displays that the lessor owns more than 2,000 aircraft and has Russian clients such as Aeroflot and Azur Air, Rossiya and Azur Air.

Avolon, which is second in world in leasing, only has 20 planes in Russia and a few in Ukraine from a fleet that exceeds 550, said CEO Domhnal Slattery to Reuters.

Avolon, said he was concerned about the possibility of sanctions being placed on SWIFT international payment transfers. It could make it impossible for airlines to pay their bills.

When asked for his thoughts on the sanctions, Avolon refused to answer.

The Group of Seven leaders (G7) said Sunday that Western allies decided to block “certain Russian bank” access to the SWIFT secure messaging system. It is used to make cross-border payments quickly and has now become the primary mechanism to fund international trade.

Lessor BOC stated that it owned 18 aircraft, which is 4.5% of its fleet. These planes are located in Russia and were placed with Aeroflot subsidiary Pobeda, as well as Ural Airlines (S7 Airlines) and AirBridgeCargo Airlines. Rossiya Airlines has a lease aircraft for its managed fleet.

The lessor stated in a statement that “our policy is to comply fully with all laws applicable for our business.” The practical implications of EU sanctions on our business are complicated and we cannot provide more information at this time.

Dubai Aerospace Enterprise (DAE), according to its website, has at least three Russian customers. This includes Aeroflot. Dubai’s lessor didn’t respond to our request for comment.

Novus Aviation Capital CoChief Executive Mounir Kuzabari said to Reuters that although the company does not have any aircraft in Russia, mass cancelations of leases in Russia may impact worldwide lease rates and aircraft prices.

IBA stated that there are also non-Russian lessors who have planes in these countries, including SMBC Aviation Capital and Air Lease (NYSE) Corp.

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