Irish-owned aircraft on lease in Russia will be recalled by their owners as sanctions against Russia escalate. Major aviation lessors based in Ireland, including AerCap and SMBC Aviation, have hundreds of aircraft in Russia.

Irish leasing firms seek to recall aircraft

As Russia continues to be hit by sanctions, Irish-based aviation lessors are expected to terminate their leasing agreements with Russian carriers. Firms have established taskforces to help them get their aircraft out of Russia and calculate the financial impact of impending sanctions.

Under EU sanctions announced on Sunday, leasing firms must terminate all contracts with Russian carriers over the next 30 days.

One industry insider told the Irish Times,

"All the lessors have taskforces established within their own businesses, and a lot of them will be trying to get aircraft out of Russia and take them back – because they’ll be grounded for who knows how long."

The combined value of Irish-owned aircraft on lease in Russia amounts to billions of dollars. Airfinance Journal claims that AerCap's aircraft in Russia are reportedly worth a combined $2.4 billion, amounting to around 5% of its total fleet.

Unconfirmed reports suggest some repossessions are already taking place. Russian news outlet RBU stated that an Irish-owned Pobeda Boeing 737, which landed in Istanbul, was prevented from flying back to Russia.

Over half of Russian planes on foreign lease

According to ch-aviation, 777 of Russia's 980 passenger planes are on lease, of which 515 are from foreign aviation firms. AerCap, the world's largest aircraft lessor based in Dublin, has 149 planes leased by Russian airlines, while SMBC has 34.

Another concern for aviation lessors is the financial fallout of sanctions on the Russian economy. Many Russian carriers rely on lines of credit to pay for their aircraft. Sanctions on Russian banks could lead to a cascade of failed payments.

Tim O'Connell, partner at Grant Thornton Ireland, said,

"You’re talking about roughly $100 million being paid out every month by Russian airlines to Irish-based leasing companies. If the banks that these airlines use are sanctioned, it’s going to be very difficult to make payments."

Ireland shuts off airspace

The Irish government announced on Sunday that it is closing its airspace to all Russian aircraft. Several European countries implemented their own bans before the European Union (EU) announced a formal EU-wide ban.

Simon Coveney, Minister for Foreign Affairs, said,

"Ireland will move to shut off Irish airspace to all Russian aircraft. We encourage other EU partners to do the same."

This comes after the UK banned Russian carrier Aeroflot from landing in the UK. Russia reciprocated by banning British airlines from landing in Russia or entering its airspace.

What are your thoughts on this situation? Do you think aviation firms will get most of their aircraft back? Let us know your insights in the comments.