Hundreds of aircraft leasing contracts with Russia have been terminated following the latest sanctions on the country’s aviation industry.
AerCap Holdings, the world’s largest plane leasing company, saw shares fall 13.34% today following last night’s statement that it would step away from a Russian industry carrying planes worth around US$2.5bn.
On Sunday, the European Union gave leasing companies until March 28 to end current rental contracts in Russia.
Around two-thirds of those, with an estimated value of US$10bn, are rented from foreign firms.
IBA said 5% of AerCap’s fleet, based on net book value, and equivalent to 152 planes, was leased in Russia, with clients including Aeroflot, S7 Airlines, Rossiya, Azur Air and Ural Airlines.
Russia warned it would retaliate against EU aviation sanctions.
AerCap’s exposure to Russia is the largest among leasing companies, with the CEO of Avalon, the world’s second-biggest leasing group, telling Reuters last month that the company had fewer than 20 planes in Russia and one or two in Ukraine.
Lessor BOC Aviation’s shares took a 3.76% tumble this morning after pulling out of the Russian market, where 4.5% of its fleet is based
"Our policy is to fully comply with all laws applicable to our business," BOC Aviation 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."
While Russia’s membership of the Cape Town Convention makes it easier to recover jets in exchange for cheaper finance for airlines, cooperation of courts is still likely to be needed, while Russian aviation authorities and airlines may decide not to cooperate with leasing companies.