Russian Airlines Face Bankruptcy Crisis by 2025

The Russian aviation industry is facing a crisis, with nearly 30 airlines, accounting for over 25% of domestic passenger traffic, on the brink of bankruptcy by 2025. This dire situation stems from mounting debts related to leasing foreign aircraft, exacerbated by international sanctions imposed in 2022 that halted lease payments and led to legislative changes requiring payments in rubles, which foreign lessors do not accept. While the Russian government plans to allow airlines to write off these debts, they will incur a 25% tax on the write-offs, an unmanageable burden for many smaller carriers. Major airlines like Aeroflot and Ural Airlines have managed to repurchase some of their leased aircraft using funds from the National Welfare Fund, but smaller airlines lack the financial capacity to do the same. The inability to access maintenance services and spare parts due to sanctions has further strained their operations, pushing them toward potential bankruptcy. The collapse of these airlines could lead to significant job losses and economic repercussions across Russia.