After Chinese-owned aircraft detained in Russia, leasing firms incur huge losses

Chinese aircraft leasing companies have emerged as the latest victims of the prolonged Ukraine war, after one firm disclosed it had received US$23 million in insurance payouts for three planes detained in Russia and never returned – part of a wave of Chinese assets held in the country in recent years.

AVMAX, which is a wholly-owned subsidiary of Guangdong-based Shanhe Intelligent, had leased the aircraft to Russian clients under three contracts, according to a stock exchange filing released this week.

The planes were turboprop-powered airliners developed by De Havilland Canada – a subsidiary of Canadian airline manufacturer Bombardier – and leased to Russian airliners Yakutia Airlines and Aurora JSC, according to the announcement. Two of the contracts had already expired last year.

Since the Ukraine war broke out in February 2022, AVMAX has made multiple attempts to recover the leased aircraft amid Western sanctions on the Russian aviation sector. “Despite ongoing negotiations and recovery efforts, the company has been unable to successfully reclaim the affected planes,” it said.

AVMAX’s situation is not an isolated case. A Zhejiang-based company’s wholly owned subsidiary, Airwork, also had six Boeing 757 freighter aircraft detained in Russia after it demanded the termination of leasing contracts and the return of its planes in 2022.

Airwork incurred losses totalling hundreds of millions of dollars after recovering just one aircraft. This forced the company to write off the value of the remaining assets and pursue protracted insurance litigation.

South China Morning Post