Russian airlines had no money to buy foreign planes

Russian airlines cannot obtain the allocation of the promised funds from the National Wealth Fund (NWF) for the purchase of foreign aircraft.

In total, carriers were promised 300 billion rubles of credit for these needs, but the Ministry of Transport has not prepared criteria for obtaining financing on a preferential basis, writes Kommersant, citing market sources.

At the same time, at least five large airlines, not counting Aeroflot, agreed with foreign lessors to purchase the aircraft. The deals need to be finalized in the coming months as most carriers have EU regulatory approvals which expire on 30 September. An extension of the terms is unlikely, says the newspaper’s source at the international leasing company.

One-third of the allocated funds, approximately 90-100 billion rubles, have already been spent on the purchase of 10 Boeing 777-300ERs by Aeroflot. Kommersant’s sources believe that this amount was initially allocated solely for the needs of the national carrier. At the same time, in March, presidential adviser Igor Levitin said that the funds were allocated to the entire industry, and “how much and which airline will receive is the prerogative of the Ministry of Transport.” At the same time, the ministry has not yet discussed the method of settlements or the criteria for selecting applicants for NWF funds.

The document is in the process of final approval, said a newspaper source close to the Ministry of Transport.

In addition to Aeroflot, the terms of transactions with foreign companies have been agreed or almost agreed by S7, Ural Airlines, Rusline and iFl, a Kommersant source close to the Ministry of Transport said. According to him, iFl intends to buy three Airbus A330s from the lessor Air Lease Corporation (USA), the license is valid until October.

Ural Airlines has received approval from US and EU regulators to purchase 19 Airbuses. Rusline plans to finalize the transaction for eight regional CRJs. The company has already bought several foreign aircraft at its own expense, market sources say.

Aeroflot informed that the insurance settlement process is nearing completion. The company is in talks to purchase at least 81 more aircraft. The purchase of such a number of narrow-body aircraft will require an additional 200 billion rubles, believes Elena Sakhnova, an analyst of the My Investments channel.

Airlines were also offered to purchase foreign aircraft on their own with a loan, Kommersant’s interlocutors said. “But there have been no attempts to discuss preferential bank loans or compensation guarantees in detail,” one of the publication’s sources noted.