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An Aeroflot 777-300ER landing at Paine Field after a test flight. (Photo: AirlineGeeks | Katie Bailey)

Aeroflot Purchases 10 Boeing 777s from Lessor

Aeroflot — Russia’s largest carrier — announced on Dec. 30, that it had bought 10 Boeing 777-300ER aircraft, which have been under financial lease from an Irish leasing company since 2013 and 2014. The airline will continue to work on further aircraft buyback deals. 

“Aeroflot has bought and received ownership rights to 10 long-haul Boeing 777-300ER aircraft, which have been under financial lease from an Irish leasing company since 2013 and 2014,” the statement said. 

According to the airline, it would continue to work on further implementation of aircraft buyback transactions in order to maintain the current fleet of foreign-made aircraft in its own operation and expand the possibility of their operation.

Sellers

According to the Aeroflot’s 2014 annual report, all 10 777-300ERs received in this period were on finance lease. (Photo: Aeroflot)

The latest agreement covers ten 777s Aeroflot leased from VEB Leasing’s Ireland branch. VEB Leasing is one of the largest leasing companies in Russia, which likely set up the Irish office to benefit from the country’s regulations regarding leasing. 

Similar to the previous A330 deal,the airline made with another foreign lessor, the sub-fleet is also on finance lease. A finance lease means Aeroflot is the legal owner and is paying a mortgage on the plane rather than renting the plane from the lessors. 

While the Russian-based carrier has already restarted 777 long-haul operations, all the planes on this list have been solely domestic. This limitation contrasts with some of the other 777s owned by other lessors, such as GTLK, the Russian State Transport Leasing Company. Despite having the entire fleet on US Commerce Department’s sanction list, Aeroflot had sent GTLK-owned 777s out of the country. 

Since May, Aeroflot has expanded its long-haul international destinations to Turkey, India, China and Thailand. The company is serving more than a dozen destinations with only seven airplanes. AirlineGeeks will continue to monitor when and if this latest fleet is deployed internationally.

Airline’s Next Options

An Aeroflot A321 in London (Photo: AirlineGeeks | William Derrickson)

According to a recent report by Reuters, the Russian carrier is exploring options to use the national fund for purchasing some of the airplanes from western lessors. 

SMBC, which took an impairment of $1.6 billion for 34 jets, said in the letter that on September 2, AlfaStrakhovanie offered it $644.2 million for 17 aircraft leased to Aeroflot, minus $82 million already paid in deposits and reserves.

However, that was “considerably less than the aggregate Agreed Values” for the aircraft, SMBC said in the letter. Adding the challenges with current EU sanctions, it’ll take a little longer for any agreement to materialize. 

All Aeroflot Airbus A321s delivered before 2013 were on finance lease according to the company’s 2012 annual report.(Photo: Aeroflot)

Given the success of buying out airplanes off financial leases, it’s possible airplanes on financial leases are the prime candidate for the sanctioned carrier’s next transaction. According to their 2012 annual report, all the airline’s A321s received prior were on finance lease. As of today, three of those A321s still remain in the fleet and all are actively flying.

Alternatively, Sberbank’s leasing arm also operated a small Irish office that shut down at the start of the invasion. Given the substantial Russian financial background, planes currently owned by the bank of its leasing company SB Leasing may have an easier path to Russian domestication.

Author

  • Fangzhong Guo

    Fangzhong grew up near an OEM airport in northeastern China, where he developed his enthusiasm for aviation. Taking upon his passion, he's now working as an aircraft interior design engineer. Besides working in the aerospace industry, Fangzhong enjoys trying out different types of airplanes and seeing how airplane interiors have evolved. So far, he's flown on over 80 types of aircraft. He also planespots in his spare time. His rarest catches included the 747 Shuttle Carrier Aircraft and AN-225.

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