14 Sep 2023 10:58

Aeroflot to use NWF money, all Pobeda profit for 2022 for insurance settlement on foreign planes

VLADIVOSTOK. Sept 14 (Interfax) - Aeroflot will use money from the National Welfare Fund (NWF), as well as all of the 2022 net profit of low-cost subsidiary Pobeda for the insurance settlement to buy out foreign aircraft, the Russian airline's CEO, Sergei Aleksandrovsky said.

"As part of the settlement, 300 billion rubles will be allocated from the NWF for all [Russian] airlines, but with the condition that airlines will also use their net profit for the settlement. Airline Pobeda earned a net profit of 15 billion rubles [in 2022] that will be completely directed toward the insurance settlement on the group's planes," Aleksandrovsky told reporters at the Eastern Economic Forum.

"The same is true for other airlines. If S7 Airlines participants in the settlement, it means it must also direct net profit. If Ural Airlines [takes part], then it also," he said.

Earlier in September, Aeroflot said it had settled relations with Irish leasing company AerCap on 18 aircraft and five spare engines.

The ownership rights to them were transferred to Insurance Company NSK, which was founded at the end of 2022 by Civilian Airport Administration, a state company controlled by Russia's Federal Air Transport Agency. NSK and this state company, in turn, are the cofounders of leasing company NLK Finance LLC, with which Aeroflot earlier signed an operating lease contract for ten Boeing 777-300ERs previously bought out from an Irish leasing company.

"In the process of the insurance settlement, we are securing significantly better terms than the ones we had. For us this is an effective endeavour. We have so far concluded a settlement on 18 planes and five engines with AerCap. We are now holding negotiations on another 17 planes and by the end of the year we plan to complete the process on 61 aircraft," Aleksandrovsky said.

Ultimately, these airliners will become the property of the leasing company specially created in Russia, which will finance their acquisition with money from the NWF, and Aeroflot will make lease payments to this company, he said. This will make it possible to transfer the planes from the foreign registry, allowing them to be used on international flights without risk of seizure due to sanctions.