Russian Transport Ministry proposes allocation of additional 295 billion rubles from National Wealth Fund for purchase of foreign aircraft - newspaper

MOSCOW. March 11 (Interfax) - The Russian Transport Ministry proposed to the government it provide an additional 295 billion rubles from the National Wealth Fund in 2024 for the purchase of foreign aircraft into Russian ownership, Kommersant said, citing sources.

The initiative was discussed at a meeting attended by President Vladimir Putin on February 7, Kommersant said. The source, who is close to the government, said the request is under consideration and a decision has not yet been made. The amount requested was calculated primarily based on the needs of Aeroflot, another aviation industry source said.

The Ministry of Transport, the Federal Air Transport Agency, the Ministry of Finance and the Ministry of Economy did not respond to the article; the airlines surveyed did not comment on the situation.

Approximately 297 billion rubles were allocated from the National Welfare Fund in 2023 for an insurance settlement covering 162 aircraft, whose new owner was NLK-Finance, a subsidiary of the Federal Air Transport Agency. As a result, foreign lessors ended their claims against Russia, both with regard to insurance policies and leasing agreements. Funds from the National Wealth Fund were allocated to NLK at a rate of 1.5% over 15 years.

Aeroflot Group has a fleet of 349 aircraft, including 78 SSJ-100 flown by Rossiya Airlines. Of 271 foreign aircraft on the Bermuda registry, 185 aircraft have been withdrawn, an Aeroflot presentation said. Kommersant said that these are 102 aircraft re-registered in 2022-2023 from foreign owners and 83 from Russian lessors. Thus, the group could potentially "debermudize" and re-register another 86 foreign airliners to the Russian lessor.

Of the previous 297-billion ruble tranche from the NWF, at least 250 billion rubles were allocated for Aeroflot's transactions for aircraft and aircraft engines, Kommersant's sources said. The carrier announced it had also allocated almost 15 billion rubles of Pobeda's net profit for these transactions. In addition to Aeroflot, both S7 Airlines (45 aircraft) and Ural Airlines (19 aircraft) were able to co-finance transactions from the National Wealth Fund in 2023. The S7 transactions, including using its own funds (34 billion rubles from net profit for 2022) totaled 45-50 billion rubles, and about 11-16 billion rubles came from the NWF. Ural Airlines used 13.5 billion rubles of its own funds, and 17-20 billion rubles came from the National Wealth Fund. Aurora re-registered five Airbus A319s using funds from the National Wealth Fund, and used an additional 2 billion rubles from its net profit for them (three additional Aurora A319 aircraft belong to the State Transport Leasing Company). Charter iFly requested funds but did not receive them.

In total, taking into account aircraft purchased from financial leasing, as well as individual transactions using own funds, Russian airlines re-registered more than 170 aircraft out of approximately 400 that belonged to foreign lessors.