Russia seizes over 500 planes, cargo world faces uncertainty
Nightmare scenario finally happened and will leave significant mark on par with 9/11: Suki Basi, MD, Russell Group
Russia has reportedly seized 543 Boeing & Airbus aircraft valued at approximately $13 billion, according to an analysis by Russell Group, a data and analytics company.
"The move - justified by the Russian Government as securing collateral for a depleted Russian aviation sector that has been crippled by global sanctions - is unprecedented, and will deepen the conflict between Russia, Ukraine and its relationship with the West," Russell said in its update.
"The nightmare scenario that has kept many of our clients awake at night has now finally happened and it will leave a significant mark on the aviation war market on a par with 9/11," says Suki Basi, MD, Russell Group. "We are stepping up our efforts here at Russell to help our clients through this difficult moment, as it is absolutely crucial for good accurate data that can help an aviation underwriter understand and know their exposures better."
Dublin-based AerCap, the global leader in aircraft leasing and aviation finance, has 74 freighter aircraft and 2,319 passenger aircraft in its fleet.
AerCap, which is listed on the New York Stock Exchange, had reported revenue of over $1.4 billion and net income of $434 million in the third quarter of 2021,
When contacted, Gillian Culhane, Vice President, Corporate Communications, AerCap, told The STAT Media Group: "We have no comment to make over and above the statement we issued on February 28."
AerCap had filed Form 6-K with the Securities And Exchange Commission, the stock market regulator of the U.S. on February 28. The release highlighted: "In response to the Russian invasion of Ukraine on February 24, 2022, the European Union, the United States and other countries have imposed a broad set of sanctions against Russia, certain Russian entities and certain activities involving Russia or Russian entities. These sanctions include prohibitions regarding the supply of aircraft and aircraft components to Russian entities or for use in Russia, subject to certain wind-down periods. AerCap intends to fully comply with all applicable sanctions, which will require us to cease our leasing activity with Russian airlines.
"As of December 31, 2021, approximately 5 percent of AerCap's fleet by net book value was on lease to Russian airlines.
"Please refer to the Risk Factors included in our Report on Form 20-F for the year ended December 31, 2020, including "Risks related to the geopolitical, regulatory and legal exposure of our business–The international operations of our business and those of our lessees expose us to geopolitical, economic and legal risks associated with a global business, including many of the economic and political risks associated with emerging markets" and "Risks related to our relationship with our lessees–If our lessees fail to cooperate in returning our aircraft following lease terminations, we may encounter obstacles and are likely to incur significant costs and expenses conducting repossessions."
Air freight rates continue rally
Tight capacity and rising fuel costs resulting from the #russiaukraineconflict has already been pushing air cargo rates up with the Freightos Air index (FAX) Shanghai-US East Coast rates climbing to more than $16/kg last week, a 42 percent increase so far this month.
"Rates from Europe to Asia are also rising with prices from Frankfurt, for example, increasing 17 percent to Shanghai and 110 percent to Hong Kong as it struggles with its own surge. The removal of Shanghai's passenger capacity will only put more pressure on rates," Freightos said in its latest update.