A civil jet aircraft of Russian Airlines Aeroflot produced by Airbus at Moscow-Sheremetyevo International Airport.
Leonid Verberg | Light Rocket | Getty Images
Foreign aircraft lessors seeking to take back $10 billion worth of planes from Russia were dealt a fresh blow on Monday when President Vladimir Putin signed a law allowing the country’s airlines to fly planes domestically.
Sanctions and the closure of mutual airspace in response to Russia’s invasion of Ukraine last month cut off the country’s air travel market. Boeing Airbus said it would not supply spare parts to its airlines. That could force airlines to take apart other planes for parts.
There are about 728 Western-made aircraft in the nation’s airline fleets, 515 of which are chartered by foreign lessors, according to Jefferies. Under EU sanctions, aircraft lessors – some of which are located in EU member Ireland – have until March 28 to reclaim the planes.
Under new rules set on Monday, the Kremlin will allow the country to provide airworthiness certificates for planes and register them in Russia, according to state news agency TASS. The law was in the works last week.
“There is an accidental nightmare, but the idea of taking an entire aviation market off the internet and violating international laws, this is new,” said Richard Aboulafia, managing director of aviation advisory firm AeroDynamic.
Aeroflot and S7, two of Russia’s largest airlines, last week stopped flying internationally. Overseas flights may risk moving lessors to repossess the aircraft.