Russia to Work on Leasing Instruments to Enable Foreign Sales of its Civil Aircraft

The Russian aviation and financing authorities will work on the issue of financial or leasing instruments required for Russian aircraft to enter foreign markets, Russian Industry and Trade Minister Anton Alikhanov said.

“As we expand into the external market, we will also need financial instruments and leasing companies. We are currently working to determine whether this will involve GTLK (State Transport Leasing Company) or, perhaps, leasing mechanisms within Rostec," he told reporters on the sidelines of the Innoprom international industrial exhibition in Yekaterinburg.

The minister noted the keen interest shown by foreign partners in Russian equipment, while also highlighting the importance they attach to financial terms. For instance, discussions covered potential projects with India for the localization of Il-114 aircraft, as well as direct deliveries to Indonesia.

Civil aircraft are typically purchased by leasing companies and leased to airlines who in turn pay for them from the revenue they earn out of ticket sales.

With Russian civilian aircraft barred from international leasing due to sanctions, Russia has no option but to develop its own lease-finance eco-system.

On the plus side, Russian leasing companies will be able to offer significantly better terms than international lessors thanks to the lower cost of Russian aircraft, trading in national currencies and lesser lease servicing cost.