Kremlin Commits More Subsidies for Superjet Operations

 - October 19, 2018, 9:38 AM

The Russian government has issued two decrees allocating financial packages worth more than $150 million to mainline and regional carriers operating within its territory. One, dated October 1, provides 400 million roubles ($6.1 million) from the government’s reserve fund directly to airlines flying within and from Russia’s Far East to other regions of the country, especially the European part. The second decree, issued on October 2, allocates the State Transport Leasing Company (Russian acronym GTLK) a subsidy worth 9.8 billion roubles covering the acquisition of Sukhoi Superjet 100s for placement with local carriers.

Due for disbursement before the end of the year, the funds will come from the federal budget as a government investment in the lessor’s base capital. The funds for GTLK cover the procurement of eight aircraft scheduled for delivery this year and next. The remainder of the capital would have to come from free capital markets.

“The governmental support shall enable the lessor to increase the number of aircraft it buys from the manufacturer for subsequent leasing so as to keep affordable rental terms,” GTLK general manager Sergei Khramagin commented. The latest subsidies come after the government in 2015 and 2016 invested 34 billion roubles into the lessor’s capital base to support Superjet acquisitions. Subsequently, the number of SSJ100s placed with the airlines via GTLK had risen to 36.

According to Khramagin, the more recent injection will allow GTLK to make prepayments and thus ensure timely delivery of the aircraft. The lessor has already reached agreements with airline customers on all eight new SSJ100s it plans to buy. Wholly owned by the Russian government, GTLK ranks among top five aircraft lessors in the country.

Meanwhile, the Kremlin is considering additional and more sizeable budgetary support for Aeroflot in view of the airline’s recent follow-on order for 100 SSJ100s. Now flying 50 Superjets, Aeroflot would base the next 100 airplanes at various airports across Siberia and the Far East rather than its hub at Moscow Sheremetyevo Airport. The plan represents part of a broader effort to establish an efficient network of now largely absent regional routes.