Russian authorities' seizure of aircraft leased by Chinese firms results in substantial financial setbacks for the affected companies.
In the ongoing impact of the Ukraine war, Chinese aircraft leasing companies have experienced significant financial strain due to planes detained in Russia. This predicament, however, has been somewhat mitigated by the diverse portfolios and strong demand in other markets.
Some Chinese lessors like AVMAX and Airwork have faced severe losses from aircraft stuck in Russia. AVMAX, for instance, disclosed receiving a $23 million insurance payout for three De Havilland Canada turboprop aircraft detained in Russia and never returned after leases with Russian carriers Yakutia Airlines and Aurora JSC. Airwork, a subsidiary of a Zhejiang-based company, had six Boeing 757 freighters detained; it recovered only one plane and recorded impaired assets worth hundreds of millions of dollars, leading to asset write-offs and protracted insurance claims.
Other major Chinese leasing firms, including Bank of China’s BOC Aviation, Bohai Leasing’s Avolon, and China Aircraft Leasing under China Everbright Bank, have also logged planes stuck in Russia as impaired assets in 2022. Despite these setbacks, the overall financial performance of Chinese aircraft lessors remains robust due to the small proportion of their business exposed to Russian leases and the strong rebound in global air travel demand, which has driven up leasing rates sharply, especially for narrow-body jets. For instance, Avolon reported a 36% net profit increase in Q1 2025 compared to the previous year.
Meanwhile, companies like China Aircraft Leasing Group (CALC) continue to expand leasing globally, as shown by recent deals to supply new Airbus A320neo aircraft to Air Cairo scheduled for delivery in 2026, reflecting ongoing growth efforts beyond Russia-linked risks.
The detention of the three planes in Russia could have wider implications for China's relations with Russia and the global community. The insurance payouts do not cover the full financial loss incurred by the Chinese aircraft leasing company due to the detention of the three planes. Furthermore, the detention of the three planes in Russia highlights the risks associated with holding assets in conflict zones.
The three planes, which were part of a wave of Chinese assets held in Russia in recent years, remain detained in Russia. The US$23 million insurance payouts received by a Chinese aircraft leasing company were for three planes that were not returned from Russia, underscoring the potential setback for China's growing presence in the global aircraft leasing market.
In summary, the geopolitical challenges caused by the Ukraine war and aircraft detentions in Russia have put a strain on Chinese aircraft leasing companies. However, their resilience is evident in their ability to mitigate losses and continue expanding their businesses globally.
- The financial strain experienced by Chinese aircraft leasing companies, due to planes detained in Russia amid the Ukraine war, is not exclusive to AVMAX and Airwork, as other firms like BOC Aviation, Avolon, and China Aircraft Leasing under China Everbright Bank have also logged planes in Russia as impaired assets in 2022.
- Despite the significant financial loss incurred from detained planes in Russia, the overall financial performance of Chinese aircraft lessors remains robust, particularly due to the strong rebound in global air travel demand which has driven up leasing rates sharply, especially for narrow-body jets.
- The detention of Chinese aircraft in Russia not only poses a potential setback for China's growing presence in the global aircraft leasing market but also highlights the risks associated with holding assets in conflict zones, as evidenced by the three detained planes that were part of a wave of Chinese assets held in Russia in recent years.
