Flight translation: the Russian government introduced temporary rules for leasing and buying aircraft from unfriendly countries

On Wednesday, April 13, Prime Minister Mikhail Mishustin signed a decree on temporary rules for the fulfillment of financial obligations by Russian air carriers and organizations to foreign companies.

The document approved the procedure for paying for rent, leasing and purchase of foreign aircraft.

“If a foreign lessor company from an unfriendly country has a structural unit registered in Russia, payments will go to its account in a Russian bank in rubles,” the government said in a statement.

The amount of payment in rubles will be equivalent to the value of liabilities in foreign currency.

In this case, calculations should be made at the official exchange rate of the Central Bank, established on the day of the operation.

“If a foreign company associated with an unfriendly country works with Russian partners through a structural unit in a state that has not joined the sanctions, the payment will be made in the national currency of the state where this structural unit is registered, or in rubles,” the Cabinet added.

Earlier, the idea to transfer payments for the lease and purchase of foreign aircraft into rubles was approved by Russian President Vladimir Putin.

As the head of state stated, against the backdrop of US and EU sanctions rhetoric, Western business unilaterally refused to fulfill its obligations under agreements with aviation and service companies of the Russian Federation.

Moscow, in turn, must respond to this step, the Russian leader noted.

“I propose to proceed from the fact that there will be no previous interaction with former partners in the near future.

We are not going to close ourselves off from anyone, and we will not be a closed country, but we must proceed from the realities that are emerging, ”Putin stressed.

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Now foreign leasing companies will not be able to accept payments from Russian air carriers in dollars and euros.

Given the growing losses, foreign businesses are likely to be forced to accept Moscow's new conditions.

Dmitry Adamidov, an independent transport analyst, shared this opinion in an interview with RT.

“Lessors are now in a difficult situation.

They cannot physically take their planes from Russia for objective reasons.

As a result, the business suffers significant financial losses,” said Adamidov.

Moreover, as the specialist emphasized, leasing companies often take loans to buy boards from manufacturers and must fulfill their obligations to banks on time.

Thus, at the moment, some organizations have a real prospect of bankruptcy, the expert believes.

As Vladimir Karnozov, an analyst with the Commonwealth of Aviation Experts Aviation Explorer, suggested in a conversation with RT, lessors may agree to open ruble accounts in Russian banks.

However, further transactions will largely depend on the position of Western governments.

“Even if the company starts accepting payments in rubles, the authorities of unfriendly countries may impose sanctions or other restrictions on it.

So it's more of a political issue.

The lessors themselves are interested in minimizing the damage from the already existing bans, and, perhaps, they could accept rubles.

However, they are not free to fully make decisions without regard to their governments,” Karnozov explained.

At the same time, foreign companies may start looking for workarounds for transactions, Dmitry Adamidov did not rule out.

In his opinion, the situation will largely resemble the process of paying for Russian gas in rubles.

“As in the case of gas, companies in the media space will begin to refuse rubles, but in reality they will be ready to accept any payment.

For example, lessors can open a representative office with us or enter into an agreement with an intermediary company that will take care of the financial aspects of the transaction.

Meanwhile, they must make a decision in the next month, as the hot summer season is ahead, ”the specialist noted.

On your wings

Recall that since the end of February 2022, the United States, the European Union and a number of other states have been introducing ever new economic sanctions against Russia.

This is how the West reacts to the military special operation carried out by Moscow to protect the republics of Donbass from aggression from Ukraine.

According to the estimates of the global database for tracking sanctions Castellum.AI, in just the last month and a half, more than 6.4 thousand restrictions have already been introduced against Russia.

Restrictions, in particular, affected the banking industry, the energy sector and trade.

Along with this, almost half of the Central Bank's gold and foreign exchange reserves were frozen, and many international companies announced their withdrawal from the Russian Federation.

At the same time, Western countries closed their airspace to Russian aircraft.

At the same time, Europe introduced a complete ban on the supply of new airliners to Russia, as well as maintenance and insurance of aircraft in European companies.

Also, initially, the European Union demanded that its leasing organizations terminate all aircraft lease agreements by March 28 and withdraw aircraft from Russia.

However, then the EU still allowed to keep the agreements that were concluded before February 26.

In response to the West's actions, Russia transferred all the leased aircraft - almost 800 liners - to its national registry.

After that, the European Commission included 21 Russian airlines in the black list - carriers are prohibited from flying to EU airports and over the territory of the union.

“Before the current events, the Russian civil aviation market was built mainly on the lease of foreign aircraft.

For a long time it was believed that such boards are more economical, safer and easier to manage.

Now air carriers will have to switch to Russian aircraft.

Of course, without the help of the state and subsidies, airlines will not be able to do this, but I think the government will help them adapt to new realities,” said Alexander Adamidov.

A similar point of view is shared by Vladimir Karnozov.

According to the analyst, in the next few years, Russia will still be able to use the foreign liners available on lease.

However, without proper maintenance, aircraft will quickly become unusable, the expert added.

“The fact is that complex equipment requires modern components that are produced in Western countries.

We can try to buy them through third countries, but since parts are often numbered, the manufacturer can quickly close this channel.

Therefore, while we have time, we need to spend it on the prompt restart of our civil aviation industry, ”Karnozov believes.

As the head of the Ministry of Industry and Trade Denis Manturov previously stated, already in 2022 Russia can produce 19 SSJ-100 aircraft.

For this, the country has the necessary foreign components, the minister assured.

Moreover, according to him, a fully imported version of the Sukhoi Superjet 100 is planned to be certified in 2023, and deliveries to airlines may begin in 2024.

Also, by the end of this year, the United Aircraft Corporation is going to put two MS-21 aircraft into controlled operation.

As Manturov noted, foreign companies refused to provide Russia with components for the production of these aircraft, so the country will have to actively engage in import substitution.

In addition, according to the minister, it is planned to increase the pace of production of Tu-214 aircraft at the Kazan Aviation Plant to ten units per year.

At the same time, the modernization of the IL-96 model is being completed.