After Russia invaded Ukraine and was sanctioned by many countries, the European Union required the aircraft leasing companies of member states to terminate the Russian-related leases, which will inevitably affect many aircraft leasing companies listed in Hong Kong.
BOC Aviation (2588) pointed out to "Hong Kong 01" that EU sanctions affect most of the aircraft in Russia, and the actual consequences are complicated.
ICBC Financial Leasing, a subsidiary of Industrial and Commercial Bank of China (1398), issued an announcement last year mentioning the risk of sanctions against Russia.
China National Bank Leasing (1606) and Goshawk, a subsidiary of NWS (0659), also lease aircraft to Russian airlines.
Zhu Jun, a mainland lawyer familiar with aircraft leasing, analyzed that even if the leasing company did not actively follow the sanctions, many factors such as maintenance and insurance could prevent it from continuing to provide services to Russia.
On March 1, an Aeroflot and a Rossiya plane were parked at Sheremetyevo International Airport on the outskirts of Moscow.
The Russian army invaded Ukraine, and many countries sanctioned Russia and issued a no-fly order.
(Pavel Golovkin/The Associated Press)
EU sanctions to end aircraft leasing contracts by end-March
Russia invaded Ukraine with its army on February 24, and many Western countries immediately imposed sanctions on Russia, kicking Russian banks out of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) international payment system, and the European Union, the United States, and Canada even banned Russian airlines from flying. .
The UN General Assembly condemned Russia's invasion of Ukraine, China abstained from voting, and officials have repeatedly stated "opposition to unilateral sanctions".
However, according to Bloomberg, the Bank of China and the Industrial and Commercial Bank of China have restricted Russia-related trade financing.
The European Union requires aircraft leasing companies in member states to terminate their leases with Russian airlines by March 28.
According to Cirium, an aviation data analysis company, there are 980 commercial aircraft in Russia, of which 777 are leased, while 515 are owned by foreign leasing companies, mostly from Irish companies, with 238.
In other words, if Western countries implement sanctions, the Russian aviation industry will "break its wings".
On February 28, the flight from Kyiv, Ukraine to Hong Kong was cancelled.
Hong Kong Airport uses the English name of Kiev "Kiev" as a Russian translation. In 1995, the Ukrainian government changed the English name to "Kyiv" derived from the Ukrainian language. In 2012, the United Nations followed, and Western countries followed.
(Photo by Lao Xianliang)
Chinese-Lithuanian joint venture seeks return of 13 planes
AerCap, the world's largest aircraft leasing company headquartered in Ireland, which leases 154 aircraft to Russia, will follow the sanctions to terminate the contract.
AviaAm Leasing China, a joint venture between a state-owned enterprise in Henan Province and Lithuania, also asked the local company to return 13 aircraft.
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BOC Aviation: Sanctions Affect Russia's Business with Complicated Actual Consequences
Sanctions and bans, and many Hong Kong-listed aircraft leasing companies, including subsidiaries of state-owned enterprises.
BOC Aviation (2588), a subsidiary of BOC Group, leases 18 aircraft to four Russian airlines, namely Pobeda and Ural, the low-cost airlines under Aeroflot. , Siberia Airlines (S7), AirBridgeCargo (AirBridgeCargo), accounting for 4.5% of the company's aircraft.
BOC Aviation said its Russian business was affected by sanctions.
(BOC Aviation website)
According to Reuters, BOC Aviation also leased an aircraft managed by the company to Rossiya, a subsidiary of Aeroflot.
A spokesman for BOC Aviation told Hong Kong 01 that the EU sanctions will affect most of the company's aircraft in Russia. The company's policy is to "comply with all laws related to its business", but due to the practical consequences of the EU's new sanctions It is complicated, and no further information can be provided at this time, and there is no response to whether the aircraft will be recovered.
BOC Aviation also pointed out that sanctions from the United States, the United Kingdom and other countries have not affected its business, and as of February 28, all companies that leased aircraft have paid full fees.
BOC Aviation was originally a Singapore company and was acquired by BOC in 2006.
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ICBC Leasing has announced to avoid dealing with the sanctioned regime
ICBC Leasing, a subsidiary of Industrial and Commercial Bank of China (1398), also leased aircraft to Aeroflot.
The company’s bond issuance announcement in August last year mentioned Aeroflot as a customer. Aeroflot’s suspended subsidiary, Dobrolet, was sanctioned by the British Treasury. ICBC implemented internal controls to avoid and be sanctioned. regimes, regions and institutions, but sanctions-related laws change frequently, and ICBC cannot guarantee immediate response.
In August 2014, Good Flying was suspended due to the annexation of Crimea in Ukraine by Russia and was sanctioned by Western countries. Aeroflot established a new low-cost airline Victory Airlines in December of the same year.
ICBC Leasing has not responded to the inquiries of "Hong Kong 01" before the deadline.
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China National Bank leases 16 aircraft in Russia
China National Bank Leasing (1606), a subsidiary of the state-owned China Development Bank, also leases 16 aircraft to Russian airlines, accounting for 7% of its fleet.
CDB Leasing did not respond to inquiries about the sanctions, the Nikkei reported.
NWS' Goshawk also has Russia-related business
Chow Tai Fook Enterprises and Goshawk, an Irish-based aircraft leasing company under NWS (0659), also lease aircraft to Aeroflot and Ural Airlines. According to a press release, they signed three aircraft leases with Aeroflot in 2017.
Goshawk declined to comment on the Russian business, according to the Nikkei.
In Beijing, the Canadian embassy in China displayed signs reading "We are with Ukraine" and "We support Ukraine."
(Ng Han Guan/The Associated Press)
HNA subsidiary companies cooperate with several Russian airlines
In addition to Hong Kong listed companies, many mainland aircraft leasing companies are also involved in Russian business.
A subsidiary of HNA Group, Shenzhen-listed Bohai Leasing, and its Irish subsidiary, Avolon, once leased aircraft to Aeroflot, and customers include Ural Airlines, UTair, Red Wings ) and Yamal Airlines.
Bohai Leasing has not responded to the inquiries of "Hong Kong 01" before the deadline.
An Airbus A330 of Aeroflot.
(File photo/Sergei Ivanov/The Associated Press)
Sanctions are broad and serious Mainland lawyers: lack of precedent for reference
Zhu Jun, a mainland lawyer familiar with the aircraft leasing industry, said that many leasing companies had previously leased planes to Russian airlines through subsidiaries established in Ireland, so they were affected by EU sanctions.
After the lease is terminated, the lessor will generally take back the aircraft for further processing or sublease to others. However, Zhu Jun analyzed that the procedures for taking back the aircraft are complicated, and the scope and severity of the sanctions are lack of precedent reference, or the process involves a large number of aircraft. There is a lot of uncertainty.
Situation in Ukraine: Flags of Ukraine and the European Union hang outside the building ahead of a special plenary session on Ukraine of the European Parliament in Brussels, Belgium, March 1, 2022.
The European Parliament said in a statement on March 1 that it had passed a resolution calling on EU institutions to "work towards granting" Ukraine EU candidate status.
(AP)
Boeing, Airbus stop providing services to Russia
Although the US sanctions against Russia have not yet explicitly banned the rental of aircraft, the two major aircraft manufacturers Boeing and Airbus have already stated that they will stop supplying parts, maintenance and support to Russia.
Zhu Jun pointed out that aircraft leasing involves aircraft manufacturers, insurance companies, trustees and other companies. Even if the leasing companies are not directly constrained, other related companies may no longer be able to provide Russian companies with important services related to aircraft leasing due to sanctions.
Luo Xiangguo, Senior Consultant of Aviation Policy Research Center of CUHK.
(File photo / Photo by Lu Yiming)
Luo Xiangguo, Aviation Policy Research Center of CUHK: It is difficult to recover the plane
Luo Xiangguo, a senior consultant at the Center for Aviation Policy Research at CUHK, said that even if Russia is expelled from SWIFT (Society for Worldwide Interbank Financial Telecommunication) and cannot be settled in U.S. dollars, not all Russian banks are currently sanctioned, and large local airlines are all operated by the state. , I believe there are still ways to deal with the issue of paying aircraft rentals.
Luo Xiangguo believes that the current international situation is severe, and under the severe and extreme circumstances of sanctions, there is no legal and technical problem for the leasing company to take back the Russian aircraft: "But now there is a war, and many countries have banned Russian flights from flying into the country. In the airspace, if the aircraft is recovered, the procedures will be very troublesome.”
The global new crown epidemic has continued for two years. Luo Xiangguo pointed out that the aircraft leasing industry has been hit hard by the epidemic, and it has only recently begun to gradually improve.
He believes that if Russia is sanctioned and flights are banned, it will definitely have an impact on the industry: "But this is only a small part, and the impact of the epidemic is much larger."
Xu Jiajian, associate professor of economics at Clinson University.
(File photo/Photo by Huang Baoying)
Economist Xu Jiajian: Depends on how sanctions are implemented
Xu Jiajian, an associate professor of economics at Clinson University in the United States, believes that under the circumstance that countries impose sanctions on Russia, aircraft leasing companies and banks have the opportunity to terminate their cooperation with local airlines. The business is different, now the plane is in Russian hands.”
Xu Jiajian said that when aircraft leasing companies and banks will terminate their cooperation with Russian airlines depends on the attitude of the sanctioning countries and how seriously they implement them.
He believes that if the sanctions continue, not only Russia will be affected, but the aviation industry, banks and Western countries will also be hit.
On March 2, at the Beijing Paralympics press conference, a reporter from the Kyiv Post asked a question with the portrait of the Ukrainian athlete Yevhen Malyshev.
Malishev is a biathlon (cross-country skiing and shooting) athlete. He was a Ukrainian junior national team member. After Russia invaded Ukraine, he joined the army and died in the war at the age of 19.
(Andy Wong/The Associated Press)
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