Russian aviation sector isolated as Boeing suspends parts, maintenance

INA-  sources

U.S. airplane manufacturer Boeing (BA.N) said it was suspending parts, maintenance and technical support for Russian airlines as the effect of sanctions in the wake of Russia's invasion of Ukraine ripple across the global aviation industry.
 
The United States said it would follow the European Union and Canada in banning Russian flights from its airspace, in a move likely to trigger Russian retaliation.
 
Boeing's announcement late on Tuesday came as aircraft and engine manufacturers, lessors and maintenance, repair and overhaul (MRO) providers with Russian clients face various EU and U.S. bans, including on leasing planes, exporting new aircraft and providing parts.
 
There are also potential payment difficulties after some Russian banks were barred from the SWIFT international payments system.
 
The new sanctions isolate Russia's aviation sector in a similar way to Iran and North Korea but will have much larger consequences given the bigger size of the Russian market and its high dependence on Western suppliers in recent years.
 
Russia accounted for around 6% of global air traffic capacity in 2021, according to aviation consulting firm IBA, up from around 4% in 2019 due to the strong relative performance of its domestic market during the pandemic.
 
Domestic capacity last year was above pre-pandemic levels and Russian carriers were seen as more reliable performers on jet lease agreements at a time when many Southeast Asian airlines halted payments or returned planes due to financial troubles.
Around 515 Russian jets with an estimated market value of about $10 billion are rented from foreign firms, according to analytics firm Cirium.
 
The lessors have until March 28 to wind up contracts under EU sanctions, but industry executives have expressed concern over whether Russian airlines will comply with orders to return the planes.
 
Peter Walter, director of technical and asset management at IBA, said he expected the ban on spare parts supply would also have a major impact on the Russian industry, as it had in Iran in the past.
 
"Because parts are limited we will expect to see aircraft that are on the ground in Russia being robbed in order to keep the remainder of the fleet operational," he said on a webinar on Tuesday.
 
Russia has domestic MRO facilities but carriers had also cut deals with foreign firms. Aeroflot last year signed a long-term agreement with Hong Kong Aircraft Engineering Company (HAECO) for component repair and overhaul.
 
HAECO did not respond immediately to a request for comment on Wednesday on whether sanctions would affect the contract.
 
Russian difficulties in sourcing spare parts could also affect international airlines that fly to Russia and may sometimes require replacement parts at the destination.
 
Flydubai, which operates a fleet of 737s to eight Russian cities at present, said on Wednesday it was aware of Boeing's announcement and monitoring the situation.
 
Russian airlines will also be barred from taking new aircraft on order from Western manufacturers, in a blow to Airbus (AIR.PA) and Boeing.
 
Russian airlines have 62 planes on order with the two manufacturers, IBA data shows, including 25 Boeing 737 MAX jets that were due to be delivered to Utair this year.
 
Russia is the only major country where the 737 MAX has not been granted permission to return to service after a near three-year grounding following two fatal crashes.