7 Feb 2023 16:47

Aeroflot awaiting clarification from lawyers on removal of EU sanctions encumbrances from aircraft

MOSCOW. Feb 7 (Interfax) - Aeroflot is awaiting clarification from lawyers on the removal of sanctions encumbrances by the European Union from foreign aircraft, the Russian flagship airline's CFO Andrei Chikhanchin said at the National Aviation Infrastructure Show 2023.

"There are indeed a number of possible legal options for how aircraft could be on the territory of the Russian Federation and be completely cleared of all encumbrances on the part of the foreign lessors. According to foreign media, the relevant clarifications and amendments to sanctions legislation in the European Union have been adopted. These are currently being analyzed by lawyers, so that they can be observed, and absolutely legally in order to regulate the complex relationships that have been occurring for a year in an incomprehensible status," Chikhanchin said at the NAIS-2023 forum.

"I would rather not go into details, anyway, as discussions like this are quite restricted from a commercial standpoint. I would call it the settlement of those relationships that exist at the moment with foreign leasing companies," he said.

The issue relates to the softening of restrictions related to the aircraft used by Russian carriers based on operational leases a source told Interfax.

After the military operation in Ukraine began, western countries stopped deliveries to Russia of civilian aircraft and spare parts, and obliged lessors to return all currently leased equipment from Russia. In April, the EU softened sanctions slightly, allowing the leasing companies to continue executing contracts for the financial leasing of aircraft.

With financial leasing, the airline pays down the full value of the aircraft over several years, after which the airplane's ownership transfers to the company. Far more widespread worldwide and in Russia in particular is operational leasing, where the airline pays only part of the aircraft's value while it is in service, after which the equipment is returned to the lessor.

Aeroflot announced the purchase from foreign leasing companies of eight long-haul Airbus 330 and ten Boeing 777 aircraft which had been in use under financial leasing terms. The remaining foreign-made aircraft in the fleet are under operational lease contracts.