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Russia Seizes its Leased Airliners


Chris Isidore & Chris Liakos

March 17, 2022.


Russia is seizing hundreds of commercial jets owned by US and European leasing companies, a further sign of the challenges the country's airline industry faces due to sanctions following its invasion of Ukraine.


Most airlines today - including those based in Russia, like national carrier Aeroflot and others such as S7 - lease their aircraft from very large leasing companies who have the money to actually buy them. Long gone are the days when airlines had the ready cash to buy their airliners, such is the astronomical cost.


President Vladimir Putin signed a law last Monday as part of the government's anti-sanction measures that will allow Russian airlines to register aircraft leased from foreign companies in Russia (instead of registering them in countries like Bermuda, as many currently are), where they will be issued local certificates of airworthiness, according to a statement from the Kremlin. The bill will make it possible for Russian airlines to keep hold of their foreign leased aircraft and operate them on domestic routes, while making it harder for foreign companies to reclaim their jets without Russian government approval.


US and European sanctions imposed on Russia require leasing companies to repossess all the aircraft they leased to Russian airlines by the end of the month and western aircraft makers such as Airbus and Boeing have already cut off Russian airlines' access to the spare parts they need to maintain and safely fly them. Russian airlines operate 305 Airbus jets and 332 Boeing jets, according to data provided by aviation analytics firm Cirium.


Russia also has 83 regional aircraft made by Western manufacturers such as Bombardier, Embraer and ATR. Only 144 planes in the active fleets of Russian airlines were built in Russia. Cirium data shows that 85% of those foreign-made planes are owned by leasing companies, and puts their combined value at $12.4 billion.

It was unclear how the leasing companies could have taken possession of these planes while they remain on Russian soil. Additional sanctions prohibiting Russian aircraft from flying to most other countries has restricted its airline industry essentially to domestic flights.

Leasing companies have not responded to a request for comment on Russia's actions, and it is unclear if they'll even want the aircraft back as they will not have access to replacement parts and won't have valid airworthiness certificates that would be accepted by western airlines.


"These jets won't be supported with parts and maintenance any longer," said Richard Aboulafia, managing director of AeroDynamic Advisory. "It's a real issue if they lose their certificates of airworthiness, which can happen if proper records aren't kept, or especially if they're cannibalized for parts."

Losing access to 85% of its foreign-built planes would be a crippling blow to the country's economy. Russia is the world's largest nation by landmass, more than twice the size of the continental United States, and it needs a viable airline industry to keep its economy working, said Charles Lichfield, the deputy director of the GeoEconomics Center at the Atlantic Council, an international think tank.

"It is an important part of Russia's economy," he said. "They want some basic domestic industry to remain in place. Russians don't fly as much as Americans do. They don't fly to Siberia for vacation."

Its airline industry is a crucial link for businesses, not only for international flights but also for domestic service for its energy sector, due to the need to transport engineers, other workers and equipment to and from its far flung oil fields.

"Aviation is an incredible enabler of economic growth, both domestically and internationally," said Robert Mann, an airline consultant and analyst. "Without it, you take it back to an almost agrarian economy, trying to operate with a railroad network."

Russia doesn't need all the planes it is seizing, as the blow to its economy from the sanctions will greatly reduce the need for air travel, added Betsy Snyder, credit analyst covering aircraft leasing companies at Standard & Poor's. "The Russian economy is tanking," she said. "No one will be going in and out of Russia, Russian citizens are losing their money so they don't have the money to travel going forward. It could be that [airlines] will be a much smaller business."

That raises the possibility that many of the planes being seized would be cannibalized for parts. "If you don't have parts manufacturing authority, then you shouldn't be making it yourself," Mann said. "You don't know what standards were used. Have you gotten the internal characteristic right? When you put it into a turbine section of an engine, will it perform like it was designed?"


Mann said that when a part reaches the end of its designed usefulness, known as "green time," an airline must choose between flying with parts that should have been replaced for safety reasons or robbing parts from other aircraft.


"You can go through that process as long as you have planes that have green time," he said. "As you run out of airplanes, your network gets smaller and you can fly fewer hours every day, until you don't have an airline."


So even keeping the aircraft won't necessarily keep the Russian airline industry operating. "Within a year Russia will cease to have any kind of viable airline industry," continued Richard Aboulafia, adding that the its airline industry could soon find itself somewhere between the heavily sanctioned industries in Iran and North Korea.


Can a country as large as Russia live without a modern, viable airline industry? "That's a thesis that has never been put to the test," Aboulafia said. "But it's about to be."



© Chris Isidore & Chris Liakos / CNN Business

Additional information and images by Kevan James






There was a time, now many years ago, when only Aeroflot was allowed to operate airline services for what was the Union of Soviet Socialist Republics (the USSR) which included Russia itself. Aeroflot was in fact, the only airline and was thus the designated air carrier. Bilateral agreements between the USSR and everywhere else obviously allowed other countries' airlines to fly to Moscow but what made Aeroflot different was that it used only Russian-built aircraft.


In 1956, the Soviets sprang a surprise on the western world by using a Tupolev TU-104, the country's first jet airliner, on a service to London Heathrow. Since then, enthusiasts, spotters and photographers, used to the usual shapes of the west's airliners, found the Tupolev and Ilyushin aircraft different and exotic.


With their distinctive downward, anhedral slant to the wings (as opposed to the dihedral upwards angle of the western types), the Soviet aircraft were indeed different. What they were not however, was fuel-efficient or quiet. With the eventual collapse of the USSR, not only Aeroflot but also those countries that were formerly under the influence of the Soviets, like Poland, Hungary, the Czech Republic and the rest, couldn't get rid of the aircraft quick enough.


Out went the TU135 and 154, the Ilyushin IL-18 and long-range IL-62. In came modern Boeings and Airbuses. And all of them leased - none of the former eastern bloc countries had the money to buy their shiny, new western-built airliners, including Aeroflot, once the largest airline in the world.


Aeroflot Tupolev TU-104 in 1972

Lars Soderstrom


Financially, most of the old USSR-dominated airlines were not viable anyway and those that were not able to adapt (and quickly) have now gone. Interflug, the east German airline, was the first to vanish, followed eventually by Malev of Hungary and Balkan Bulgarian.


Western airlines of course faced similar difficulties as new ways of doing things swept the world; Pan Am, Sabena of Belgium, Swissair and other famous names have all gone and every time an airline, especially a large one, goes bust, a glut of leased aircraft flood the market, with leasing companies sometimes struggling to find an operator with whom to place their aircraft.


So assuming all those now in Russia were successfully repossessed, what would happen to them? Most likely they would go into long-term storage and with the airline industry still in the early stages of recovery from government responses to COVID-19, many of them would probably never fly again, no matter how new they might be.


Russian airlines will not be making lease payments on all those Airbuses and Boeings now inside the country so there will be a financial hit for the leasing companies, but that remains even if the aircraft are returned, should they be sitting on the ground in storage, as they most likely would be. However one looks at it, Russia's actions will be felt for some time to come.