Russian Tensions A Concern For Lenders

 - May 21, 2014, 3:00 PM
MIchael Kahmann, managing director, CIT Business Aircraft Finance.

 

Russia has been a growing market for business jets, but the recent Cold War-like tensions between the country and the U.S. have clearly raised concerns among aircraft financiers over the status of their clients’ aircraft. “Certainly I think the big news is the geopolitical stresses that we see with respect to the Ukrainian space as well as Russia,” said Michael Kahmann, managing director and group head of CIT Business Aircraft Finance.

Here at the EBACE show, CIT (Booth 6143) announced that it has provided financing for a 2013 Embraer Lineage 1000 for a Kazakhstan-based energy resource management company. “We are pleased to complete this transaction, which represents our first ultra-large-cabin business aircraft financing in Kazakhstan,” Kahmann told AIN.

While the company declined to identify how many private aircraft it has financed in Russia and the CIS, CIT has had a great deal of experience operating in the area and like many lenders it has developed a suite of prudent measures above the typical know-your-customer procedures. “The transactions that we’ve done in those regions all have as a common denominator an independent third-party manager that we vet very carefully,” Kahmann said, noting that other safeguards in place include independent pilots and independently monitored maintenance. “One of the reasons is [that] they are mobile assets, they can be flown anywhere and so you do have to watch them very carefully.”

Despite the current political concerns, CIT expects to remain engaged in the area. “We continue to look in a cautious but measured way in terms of being able to provide financing to those regions,” said Kahmann. “Cautious in the sense that we’re not immune or ignorant of the realities of the political situation, but also measured in a sense that a lot of people in those regions have multi-national business ventures.”