23 Mar 2022 21:08

Russia to decide on buying out over 500 foreign-made planes worth $20 bln - minister

MOSCOW. March 23 (Interfax) - The Russian government is to decide whether to buy out more than 500 aircraft with a total residual value of $20 billion, Russian Transport Minister Vitaly Savelyev at the Federation Council.

"First of all, we need to come to a decision with the government on what should be done by airlines that we have pretty much urged to keep planes - that is, planes should be bought out or not bought out. Because companies should continue to make lease payments," Savelyev said.

Airlines are trying to hold negotiations with lessors to buy out planes, "but so far without result," he said.

"Requests have already been received for more than 500 foreign-made aircraft [...] We are now negotiating with the government [regarding buying them out]. I'll just tell you the amount of the buyout - this is $20 billion in residual value, if we buy out what we haven't paid. This is a very large amount," Savelyev said.

The demands of leasing companies to return aircraft are "political decisions," Savelyev said. Swiftly reselling 500 planes will not be possible, he said.

"The second part is letters of credit. This is approximately 200 billion rubles for all airlines, because our banks, approximately 20 or so banks, have issued letters of credit against foreign banks, guaranteeing these payments. Right now, these letters of credit are unsealed, and default on the part of airlines, which will happen on March 28, I hope we'll find a solution by that time [...] this default will yield a cross default on our banks. Therefore, either the banks suffer or the airlines do, because banks are pursuing claims," Savelyev said.

The EU on February 26 imposed sanctions that banned the supply of civil aircraft and spare parts to Russia, as well as their maintenance and insurance, and obliged lessors to terminate existing contracts with Russian carriers by the end of March, Savelyev said on March 22.

There are around 1,300 aircraft in Russia at the moment, the Transport Ministry said earlier.