Tuesday, March 5, 2024
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S7 Airlines IS All Set To Return Leased Boeing 737 Max

The Russian government has given its authorization for S7 Airlines to return its Boeing 737 MAX fleet
to lessors. The carrier has two 737 MAXs that it’s currently unable to operate due to ongoing sanctions against Russia.

Russian carrier S7 Airlines has been granted a special permit from Russian authorities to return its two Boeing 737
MAX aircraft to their owners. The two jets, both Boeing 737 MAX 8 variants, are owned by Aviation Capital Group (ACG) and Air Lease Corporation (ALC), two leasing firms based in California. S7 Airlines has essentially been stuck
with the aircraft for over two years since the MAX groundings in March 2019. Under Russian law, carriers must be given special permission from the government before they can return leased aircraft.

The airline, along with another unnamed Russian carrier, wrote to the government earlier this year asking to return their leased aircraft to Western owners. They argued that it was impossible to operate the aircraft without Western support Russia’s Prime Minister Mikhail Mishustin signed off on this, giving S7 the all-clear to return the aircraft. Interestingly, the exchange won’t be possible directly out of Russia due to sanctions, so a third-party nation, reported to be Turkey, will be involved. The aircraft in question are registered as VQ-BGV and VQ-BGW and are both less than four years old.

The aircraft were delivered straight to S7 Airlines in October 2018 after conducting their first flight weeks before.
The two MAX jets have been in storage since March 2019 after the MAX was grounded worldwide in the wake of two deadly crashes. While Russia lifted its ban on MAX operations (with caveats) in July, S7 Airlines has not been able to operate its two MAXs due to economic sanctions against Russia including aircraft parts and maintenance support, effectively rendering the jets inoperable long-term.

According to a report of Simple Flying, another Boeing 737 MAX destined for S7 Airlines was given a Turkish registration and will fly for AnadoluJet. The Siberian airline had an order for 10 MAX jets but only ended up taking delivery of two. The question of what will happen to Western aircraft leased by Russian carriers has been unclear since the outbreak of the Ukraine conflict.

With a series of quick seizures at foreign airports, many lessors were initially hopeful of recovering their planes, while others, including ALC, have written off aircraft stuck in Russia. Thus far, the Russian government has not wanted airlines to return their leased aircraft and has made this clear from the outset. This political move has
cost leasing companies billions of dollars. BOC Aviation, a Singaporean leasing firm, was the latest company to write off its stranded jets in Russia to the tune of $800 million.

What are your thoughts on the crisis affecting leasing companies with planes stuck in Russia? Do you think they will ever recoup their aircraft? Let us know in the comments.



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