“We won’t accept an assignment that we’re not sure we can do,” he said. “I’m still doing research on what we can and can’t do legally.”
While a few planes may have been recovered abroad before international flights were halted,they are of little use to their owners without the meticulous maintenance records that accompany every aircraft and are often stored by airlines themselves,experts said. And the longer a plane is stuck in Russia,the greater the concern that work on the jet’s body,engines and flight systems may not be logged,causing its value to plummet.
Aeroflot has stopped flying internationally.Credit:Getty
“Unless you have those records,the aircraft is virtually worthless,” said Quentin Brasie,founder and CEO of ACI Aviation Consulting. “They’re literally more important than the asset itself.”
The financial consequences of the planes’ being held in Russia could be far-reaching,too. Such aircraft are financed in a variety of ways,including funding from banks,leasing companies themselves,and investors in securitised debt.
Insurers and reinsurers may be on the hook,too,experts said. Aviation war insurers,in particular,are concerned and facing their biggest potential losses since the Sept. 11 terrorist attacks,according to Russell Group,a data and analytics company. Aircraft insurance premiums have been on the rise for years as the industry struggled to counter recent annual losses.
As prices went up during the pandemic,insurers cut coverage,according to Suki Basi,founder of Russell Group. At the least,the situation in Russia will probably have a similar effect.
“You pay more and you get less coverage,” he said. “If it does nothing to premiums,it will do that.”
“The general consensus is:That’s it,we will not be able to recover them,”
Vitaly Guzhva,a finance professor at Embry-Riddle Aeronautical University.
There will be lasting consequences for Russia,too. The crisis is likely to drive up the cost of doing business there generally and may cause some leasing companies and insurers to swear off the Russian market.
And while nationalising the planes may provide a short-term benefit to Russia in keeping domestic flights moving,it won’t be long before carriers there grow desperate for spare parts. With Boeing and Airbus refusing to offer parts and support to Russian airlines,those carriers are likely to start cannibalising the planes they have on hand,devaluing those aircraft.
Ken Hill,who also performs aircraft repossessions,knows that first hand. Two years ago,a U.S. leasing company hired Hill to recover three Boeing 737s at a small airport just outside Moscow,he said. The owner of the company that had leased the planes resisted his efforts to recover them,he said,but,after a few days Hill gained access to the hangar — only to find that the aircraft had been gutted.
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“The airplanes were there,but guess what wasn’t there? The engines,” he said. “They had robbed all three airplanes. They were basically just junk carcasses.”
What happens next is anyone’s guess,even among experts. “We all have a lot of questions,” said David Tokoph,CEO of mba Aviation,an advisory firm,summing up the conversations at the San Diego conference. “We all have a lot of opinions. And we don’t have a lot of answers.”