Post by Deleted on Mar 10, 2022 18:22:52 GMT 1
As I see it at least, the current situation has grave implications for the aircraft manufacturers, and by extension, for our hobby.
We all know that the Russian fleets are registered in Bermuda or Ireland, not just to avoid the Russian equivalent of VAT, but more importantly because they are owned by a leasing company, who by the expedient of putting them on a foreign register, means they don’t have to pay VAT (or its equivalent) either, and in theory it is easier to recover the aircraft if the lessee doesn’t pay up. However, this is not a normal situation, and with a large percentage of Aeroflot’s fleet now ‘stored’ (I use the term loosely), and no lease charges being paid, the leasing companies are in a conundrum. They can’t recover the aircraft for obvious reasons, and even if the war ended tomorrow, who would want to fly to Russia?
When, eventually, the lessors are able to get to them, they will be taken away, because Aeroflot will have defaulted on the payments, and short of anyone with extremely deep pockets covering the costs, (very unlikely I would imagine), Aeroflot will cease to exist as an international airline. What is more worrying for the leasing companies though, is what to do with the aircraft. Most are less than 6 or 7 years old. They will have sat outside (as anyone who has visited Russia will know, they are not big on hangarage), during a Russian winter with no maintenance whatsoever. First, they will need to put them into a condition to at least ferry them to another site. They will then need to assess their condition and decide what to do with them.
Having seen the state of aircraft which have come back off leases, even in more rigorously controlled environments, I imagine there will be a considerable amount of work required. It’s a bit like a hire car really, (who looks after a hire car?), and whilst there are rigorous checks and balances in place, who can say when a component is going to fail? I did read that the Russians had offered to pay in roubles, which would probably be good business for wheelbarrow manufacturers, but the reality is that the contract will have specified US dollars, or possibly euros in the case of the Irish-registered aircraft, and that is inviable. The MC-21 is way behind schedule and will no doubt exhibit the usual problems associated with Russian-built aircraft once in service, (underpowered and with a shorter range than predicted), so I doubt that it will be their saviour, either.
Stand by to see a lot of leased aircraft flooding the market and appearing in some very unusual colours, once this extreme unpleasantness is over, which will significantly affect the short-term sales of Airbus and Boeing. It could get interesting...
We all know that the Russian fleets are registered in Bermuda or Ireland, not just to avoid the Russian equivalent of VAT, but more importantly because they are owned by a leasing company, who by the expedient of putting them on a foreign register, means they don’t have to pay VAT (or its equivalent) either, and in theory it is easier to recover the aircraft if the lessee doesn’t pay up. However, this is not a normal situation, and with a large percentage of Aeroflot’s fleet now ‘stored’ (I use the term loosely), and no lease charges being paid, the leasing companies are in a conundrum. They can’t recover the aircraft for obvious reasons, and even if the war ended tomorrow, who would want to fly to Russia?
When, eventually, the lessors are able to get to them, they will be taken away, because Aeroflot will have defaulted on the payments, and short of anyone with extremely deep pockets covering the costs, (very unlikely I would imagine), Aeroflot will cease to exist as an international airline. What is more worrying for the leasing companies though, is what to do with the aircraft. Most are less than 6 or 7 years old. They will have sat outside (as anyone who has visited Russia will know, they are not big on hangarage), during a Russian winter with no maintenance whatsoever. First, they will need to put them into a condition to at least ferry them to another site. They will then need to assess their condition and decide what to do with them.
Having seen the state of aircraft which have come back off leases, even in more rigorously controlled environments, I imagine there will be a considerable amount of work required. It’s a bit like a hire car really, (who looks after a hire car?), and whilst there are rigorous checks and balances in place, who can say when a component is going to fail? I did read that the Russians had offered to pay in roubles, which would probably be good business for wheelbarrow manufacturers, but the reality is that the contract will have specified US dollars, or possibly euros in the case of the Irish-registered aircraft, and that is inviable. The MC-21 is way behind schedule and will no doubt exhibit the usual problems associated with Russian-built aircraft once in service, (underpowered and with a shorter range than predicted), so I doubt that it will be their saviour, either.
Stand by to see a lot of leased aircraft flooding the market and appearing in some very unusual colours, once this extreme unpleasantness is over, which will significantly affect the short-term sales of Airbus and Boeing. It could get interesting...
