Russia could refuse to return leased aircraft - draft law

[LONDON] The Russian government plans to order domestic airlines to pay for leased aircraft in roubles and bar them from returning planes to foreign companies if leases are cancelled, according to a draft law published on Thursday (Mar 10).

Western sanctions introduced in response to Russia's invasion of Ukraine have forced Russian carriers to cancel many international flights for fear that their aircraft will be seized by foreign lessors or banks.

The sanctions have also frozen much of Russia's foreign reserves and forced authorities to look for ways to limit foreign currency outflows.

Under a law drafted by the transport ministry, Russian airlines will pay their leases in roubles throughout 2022.

If a foreign lessor terminates the agreement, a special government commission is to decide whether the aircraft can be returned or rule that the aircraft must stay in Russia.

Sanctions imposed after Russia's invasion give European leasing firms until Mar 28 to sever ties with Russian airlines, sparking a game of cat-and-mouse from Asia to Africa as lenders try to seize jets with little success.

The aviation leasing industry, which owns more than half the world's airliner fleet, is facing what experts say could be its largest mass default, raising the likelihood of significant claims to insurers and legal wrangling expected to last for years.

In total there are almost 780 jets leased by Russian airlines, including 515 from foreign lessors.

Some 425 of these are most at risk, according to consultants Ascend by Cirium. REUTERS