Russia to Consider Nationalisation of Aircraft to Save Aeroflot

The government would be willing to buy out the airline's leased aircraft, but that the purchases would be difficult to fund owing to financial sanctions and the freezing of Russian cash holdings overseas.

Highlights

  • Russia's Ministry of Transport is considering options for nationalising aircraft that Aeroflot Group presently leases from foreign lessors in order to insulate the flag carrier from the impact of devastating international sanctions.
  • Russian airlines were allegedly advised during an emergency meeting on February 27 that the authorities could only safeguard the flag carrier.
  • All EU lessors have until March 28 to cancel their current contracts with Russian airlines and reclaim the aircraft as part of the European Union sanctions imposed after Russia's invasion of Ukraine.

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According to the country's RBC business news, Russia's Ministry of Transport is considering options for nationalising aircraft that Aeroflot Group presently leases from foreign lessors in order to insulate the flag carrier from the impact of devastating international sanctions.

Russian airlines were allegedly advised during an emergency meeting on February 27 that the authorities could only safeguard the flag carrier. Privately owned airlines were told to deal directly with lessors in order to delay the repossession of their planes until a solution could be found.

Meanwhile, an insider at Aeroflot told Russian aviation news website FrequentFlyers.ru that the government would be willing to buy out the airline's leased aircraft, but that the purchases would be difficult to fund owing to financial sanctions and the freezing of Russian cash holdings overseas. As a result, the aircraft would effectively be nationalised, with the owners receiving no recompense. The Bloomberg news agency has hypothesised that the likelihood of billion-dollar write-offs is growing.

All EU lessors have until March 28 to cancel their current contracts with Russian airlines and reclaim the aircraft as part of the European Union sanctions imposed after Russia's invasion of Ukraine.

According to a source in the industry, Aeroflot is not considering forcible nationalisation of its planes since such a move would almost certainly result in direct fines against the airline. So yet, no sanctions have directly mentioned the flag carrier, and it is simply affected by the general limitations on Russia's aviation and finance industries.

Datchanapriya is a journalism and mass communication student from Chennai. Has always been passionate about writing and connecting with people.

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