Hit By Western Sanctions, Aeroflot Signs Letter of Intent for 339 Aircraft with UAC – AirlineGeeks.com

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According to Russian Industry and Trade Minister Denis Manturov, the total value of the contract would be more than one trillion rubles, around $16 billion, an unprecedented figure in Russian history.

In practice, Aeroflot has two ways to finance this plan: seek new funds from its main shareholder, the Russian government, or go to the market, the former being the best option in the face of huge uncertainty about the company’s cash flow after Western sanctions hit Russian aviation hard.

Another challenge will be to get manufacturers to increase their production rate, as currently only a few units a year are produced.

Aeroflot’s turn to Russian companies for new aircraft is likely as much out of necessity as a desire to support other Russian companies. As a result of sanctions brought against Russia and local corporations by dozens of countries around the world, major aircraft manufacturers like Boeing and Airbus are forbidden from selling new aircraft, parts and other services to the company.

In addition, potential lessors aren’t able to provide aircraft to carriers either. (Some have even put substantial effort into repossessing aircraft that were being leased to airlines in Russia before it invaded Ukraine.)

As the nation’s flag carrier, Aeroflot’s nod to Irkut, Sukhoi and Tupolev may be as much of a signal — showing how Russia plans to get by without a dependence on other countries’ exports — as it is filling one of the airline’s needs.

The specific timeline for these orders is still unclear.

Editor’s Note: A portion of this article was written by Edgardo Gimenez Mazó for Aviacionline.

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