KBRA Releases Research – Russia’s Invasion of Ukraine: An Unwelcome Hit to Aircraft Leasing and Aviation

NEW YORK--(BUSINESS WIRE)--KBRA releases commentary that discusses the setbacks facing the recovery of the aviation industry due to Russia’s invasion of Ukraine and the possible medium- and long-term effects of this crisis for both lessors and airlines. The impact of this invasion will be seen both in Europe and globally given the international role of aircraft lessors who lease aircraft to airlines all over the world, including in Russia, Ukraine, and the neighboring countries.

KBRA believes the ongoing conflict is 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.

We note the following:

• The negative credit implications for airlines and lessors due to recent developments, including the EU’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 Russia, Ukraine, and Belarus, based on the owned fleet of the lessors.

Click here to view the report.

Related Publications

• Russia-Ukraine Conflict: Potential Aircraft ABS Implications
• Russia’s Invasion of Ukraine: Initial Contours of Credit Risk
• A Russian Shock to Sentiment
• Global Aviation 2022 Sector Outlook: Firm Fundamentals Amid a Turbulent Recovery

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.