Crisis in Ukraine: S7 returns two Boeing 737 MAX to lessors

LONDON – S7 has received permission from the Russian government to return two of its Boeing 737 MAX to lessors.

The Ministry of Transport announced via a published document that the transfer will take place on New Year’s Eve, with Turkey expected to facilitate this transfer.

It is understood that the two aircraft in question are those already delivered, VQ-BGV and VQ-BGW.

VQ-BGV will be returned to Aviation Capital Group, while VQ-BGW will be returned to Air Lease Corporation. Vitaly Savelyev, Russia’s Transport Minister, said this return is happening because:

“[The airline is even more] deprived of the possibility of receiving spare parts and support for these new aircraft”.

A tiny victory for donors…

This is a tiny victory for aircraft lessors, as at least two planes will currently return to rightful owners and be able to escape the twisted guise of nationalisation.

As mentioned in The Editor’s Corner #10, it has become clear that the backers will not win Russia’s battle, so they can win any victory handed to them.

Such a view was established following initial rulings by Sri Lankan courts in June that an Aeroflot Airbus A330 could return to Russia.

What remains clear, however, is that it could set a precedent for future incidents where leasing companies attempt to steal the plane the Russians took with them.

If the Sri Lankan courts have overturned this ban, then it is something Aeroflot can use in future legal cases, especially with the nationalization effort in full swing.

And it all takes shape with Aeroflot’s desire to fly internationally, but only in specific markets, where they know they have considerable influence.

In recent years, the two countries have strengthened their political and cultural cooperation, in particular thanks to visa-free travel between Russia and Sri Lanka. So that’s something else you need to consider.

However, with today’s news, the backer battle may end up going the other way, which will be a good thing.

The sanctions are starting to bite: in favor of the lessor…

It’s becoming clear that the sanctions are starting to bite Russia, especially if it means making a slight U-turn on the flight of Western-delivered planes.

On top of that, Russia’s plans to offer its own portfolio of aircraft to customers could mean Western planes could be returned much sooner than we think.

With the coin sanctions hitting the airlines hardest, Putin’s hand has to be forced ever so slightly. The donors hope that the Russians will develop this return by plane, so that they can then recover their assets.

And if they can do it as soon as possible, they may not need to write off their assets or pursue insurance claims.

Either way, it will be interesting to see how this situation develops and whether Russia will eventually abandon its nationalization strategy and focus on its own aircraft.

Christi C. Elwood