It will be “a lot of time, if ever,” before Dublin-based aircraft leasing company Avalon brings planes to the US Russian market, according to managing director Dómhnal Slattery.
The jet lessor – one of the world’s largest – currently has 10 planes in Russia, which it has been unable to retrieve since the EU imposed sanctions on the country after invading Ukraine. It originally had 14 but was able to recapture four.
Aircraft rental companies, including Dublin-based AerCap – the world’s largest – have seen billions of dollars worth of planes confiscated by the Russian government in retaliation for sanctions.
With no immediate or even medium-term prospect of returning their aircraft, lessors now face the likelihood of having to write off the jets.
“From Avolon’s perspective, it will be a very long time, if ever, before we look at leasing again in Russia – certainly under the current political infrastructure,” Mr. Slattery said Irish Independent.
“Our exposure to the Russian market has always been relatively small. As a company, we always had concerns about the political risk there.
“Unlike some of our competitors – and I’m not dissing our competitors here – we’ve always been nervous about this case law.”
AerCap is the most active in the Russian market of any lessor, with nearly 150 aircraft based there.
“Our exposure is in the zone that it’s a headache, not a migraine,” said Mr. Slattery.
“We had about $400 million worth of planes in Russia. Combined with aircraft we have seized and have control of and security packages we have been able to draw on, our net exposure is less than $200 million.
“With a balance sheet of $30 billion, that’s more of a nuisance than anything.”
Avolon currently has a fleet of 824 aircraft, including 538 owned, 54 managed and 232 on order.
Landlords will hope to recover some of their probable write-offs in Russia from insurance companies.
Mr Slattery said: “We are not allowed to make public comments about the insurance companies other than to say we believe our emergency policy – our obsessive emergency policy – is in place. We believe it is valid, we believe we have taken all the right steps under the terms of this policy to ensure it remains in effect.”
He said the exposure levels he outlined for Avolon in Russia are prior to any mitigation of insurance claims.
today in Irish IndependentEU Financial Services Commissioner Mairead McGuinness said Irish aircraft lessors with aircraft stuck in Russia should not be left with an “unreasonable cost burden”.
However, she declined to say whether a compensation scheme will be introduced for leasing companies suffering billions of dollars in losses as a result of sanctions Wladimir Putin Regime.
Mr Slattery said the sanctions imposed on Russia were “entirely appropriate”.
“Russia was the 10th largest aviation market in the world and will likely continue to be a very large market domesticallyrket,” he said. “So from a risk/reward perspective, it’s going to be an interesting conundrum to see how that pans out in terms of people’s appetites to ship planes into this market.”
Avolon announced this morning that it has struck a deal with Turkey’s Gözen Holding, under which all 500 electric air taxis ordered by the Irish group last year – and a further 50 – will now be placed with airlines around the world.
Gözen Holding, which owns Freebird Airlines, has committed to buying or leasing up to 50 electric air taxis from Avolon, with an option to buy up to 50 more.
The VX4 electric air taxi was developed by British company Vertical Aerospace, founded by Belfast entrepreneur Stephen Fitzpatrick. Vertical is listed on the New York Stock Exchange.
Avolon is a shareholder of Vertical while Mr. Slattery is its non-executive chairman.
https://www.independent.ie/business/a-long-time-if-ever-before-jet-lessor-avolon-returns-to-russia-says-ceo-41498566.html “A long time, if ever,” before jet lessor Avolon returns to Russia, CEO says