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Putin wants to keep civil aircraft in Russia by law – Economy

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This is more than ten billion dollars: in reality, many aircraft should be returned to Western leasing companies, according to sanctions. But a new Russian law aims to prevent this.

Russian airlines should register planes as their property, even if they don’t actually own them: Russian President Vladimir Putin on Monday signed a law that would make hundreds of planes inaccessible to their foreign owners. These are machines worth more than ten billion dollars. Under the law, airlines must register aircraft they lease in Russia and issue new airworthiness certificates so they can continue to be used there.

The sanctions introduced by the European Union because of the war against Ukraine stipulate, among other things, that the leasing contracts will be terminated before March 28 and that more than 600 machines will be delivered to their owners, most of them based In Ireland. Aircraft manufacturers are also not allowed to deliver new aircraft or spare parts to Russia. A large part of the fleet of Russian airlines is leased and registered in Bermuda. The Bermuda aviation authority decided over the weekend not to renew the airworthiness certificates of the leased fleet because spare parts would be lacking in the future.

Hardly anyone in industry circles expects the planes to be returned to their owners. “There will be no confiscations,” said the director of a leasing company that has leased dozens of planes to Russian airlines. The industry now expects that it will have to cancel at least part of the fleet used in Russia. Because even if the leasing companies finally got access to the machines again, the plane would likely be in unsaleable condition. Russian airlines will likely have to start cannibalizing part of the fleet for spare parts storage in the coming weeks to keep the rest flying. This is accompanied by a huge loss of value.

Observers expect the legal wrangling to drag on for years. Aircraft are insured against war damage and confiscation through the airlines and often through leasing companies as well. However, it is still not entirely clear whether insurers will easily accept such a large claim.

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