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Sanctions on Russia End Aircraft Leases – Affect About Half of Russian Airlines Planes

FILE - A Russian Pobeda airline passenger plane waits for its flight to Moscow at the Airport Berlin Brandenburg in Schoenefeld, near Berlin, Jan. 17, 2021.

Asian aircraft lessor BOC Aviation said on Monday that EU sanctions requiring the termination of leases to Russian airlines by March 28 would affect most of its aircraft in Russia as the leasing industry began counting the cost of the rules.

Russian companies have 980 passenger jets in service, of which 777 are leased, according to analytics firm Cirium. Of these, two-thirds, or 515 jets, with an estimated market value of about $10 billion, are rented from foreign firms in the mainly Ireland-based industry.

BOC said it had 18 planes representing 4.5% of its owned fleet based in Russia, placed with Aeroflot subsidiary Pobeda as well as Ural Airlines, S7 Airlines and AirBridgeCargo Airlines.

In addition, it has another aircraft in its managed fleet on lease to Rossiya Airlines.

"Our policy is to fully comply with all laws applicable to our business," the lessor said in a statement. "The practical consequences of the new EU sanctions are complex and at the present time we are unable to provide further information."

AerCap Holdings, the world's biggest leasing company, has the largest exposure globally to Russia and Ukraine with 152 planes, according to aviation consultancy IBA.

AerCap has a total portfolio of more than 2,000 planes and Russian carriers Aeroflot, S7 Airlines, Rossiya, Azur Air, Ural Airlines, Yamal Airlines and Yakutia Airlines are among its customers, the lessor's website says.

Other non-Russian lessors with planes in the countries include SMBC Aviation Capital, Air Lease Corp and Aviation Capital Group, IBA said.

Avolon, the world's second biggest leasing company, has fewer than 20 airplanes in Russia and one or two in Ukraine out of a total fleet of more than 550 aircraft, Chief Executive Domhnal Slattery told Reuters this month.

He said at the time that Avolon was concerned that sanctions on international payment transfers through SWIFT could be disrupted, making it hard for airlines to pay their bills.

Group of Seven (G7) leaders said on Sunday that Western allies had decided to cut off "certain Russian banks" from the SWIFT a secure messaging system to ensure rapid cross-border payments which has become the principal mechanism to financeinternational trade.