AirBridgeCargo Asia Pacific market

The sad dismantling of a cargo airline is under way, as lessors circle AirBridgeCargo’s fleet.

The carrier is treading a fine line between the demands of Russia’s aviation authority to keep the aircraft, while also attempting – in part – to satisfy lessors instructed to retrieve them.

BOC Aviation had three leases with AirBridgeCargo (ABC). One aircraft, worth $148m according to court documents, was leased for $1.2m a month but has been returned. BOC succeeded in retrieving it from Hong Kong Airport, which it claimed was an unsuitable place to store an aircraft, and has flown it to San Bernadino.

Despite an order by BOC on 5 March to ground its three aircraft in Hong Kong, Shanghai and Zhengzhou, ABC flew one to Moscow, while another was diverted to Dubai – where BOC tried to ground it again – before it went on to Russia.

ABC told BOC by telephone on 8 March it would refuse to return the two aircraft in Russia until BOC allowed the third to leave Hong Kong, BOC claimed in a court document.

In a letter, ABC noted: “Aircraft could not be moved outside Russia until the customs clearance with Russian customs authorities has been completed. A breach of this requirement could expose the aircraft to customs arrest or other customs lien.

“Moreover, we inform you that Russian aviation authorities issued the document requiring prior authorisation for any movement of any aircraft operated by any Russian carrier outside Russia. In this respect, [the] lessee must also obtain the approval of the Russian aviation authorities in order to be legally able to proceed as requested in the termination notice. We hereby confirm that the lessee makes all reasonable efforts to make everything possible to comply with lessor’s requests in accordance with the termination notice. We are also open to the discussion on the above matters at all times.”

The two aircraft remain in Russia.

BCC Equipment Leasing, meanwhile, has managed to retrieve three engines, but not the airframe and a fourth engine.

Court documents show that BCC, which owns one of ABC’s 747-8Fs and its four GE engines, had leased them to Lilac Wing, which in turn leased them to AirBridgeCargo.

The insurance coverage for Russia, Belarus and Crimea was invoked on 2 March, yet a day later, the aircraft flew from Moscow to Vientiane, before going on to Hong Kong, arriving on 4 March. Two days later, ABC flew the aircraft – equipped with just one of BCC’s engines and other spare engines – to Krasnoyarsk and then to its hub in Sheremetyevo, Moscow.

ABC told BCC that the aircraft had been removed from commercial operations, but it could not be removed from Russia without the approval of Russia’s aviation authorities.

BCC noted: “There is a grave risk the aircraft will be expropriated by the Russian government at any time moment, without due process, without just compensation and without recourse to a practical legal remedy.”

Two of the engines are in Hong Kong and a third in Scotland, at MRO facilities, both of which have agreed to return them to the lessors, while ABC has acknowledged that its lease is terminated. BCC has now voluntarily dismissed its case.

ABC appears to have a total of 13 aircraft on lease, according to aviation databases: four are on lease from Russia; Aircastle has two; Aviation Capital Group has one; DAE Capital owns its 777; and Gecas owns two.

No doubt the returned aircraft will shortly return to service, under a new name, in this capacity-constricted market.

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