KBRA: Russia’s Invasion of Ukraine Will Negatively Impact Aircraft Leasing

According to a new report from Kroll Bond Rating Agency, the impact of Russia’s invasion of Ukraine on aircraft lessors and airlines will be felt throughout Europe and globally given the international role of lessors who lease aircraft to airlines all over the world, including in Russia, Ukraine and neighboring countries.

KBRA believes the ongoing conflict will be credit negative for the aviation industry, especially as rising fuel prices will only be exacerbated by these events. The disruption to cash flow for some aircraft lessors may also impact lessors’ revenues, which were already constrained due to the impact of COVID-19.

KBRA also noted:

  • The negative credit implications for airlines and lessors due to recent developments, including the European Union’s recent sanctions that will force European leasing companies to terminate their lease agreements with Russian operators within 30 days
  • The potential impact of sanctions and the exclusion of some Russian banks from SWIFT on aircraft lessors
  • The closing of Russian airspace to various European airlines, and vice versa, and the immediate impact on airlines
  • Exposure of the largest aircraft lessors to the area, particularly in Russia, Ukraine and Belarus, based on the owned fleet of lessors

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