The Russia/Ukraine conflict has led to a monumental decoupling of Russia from the global economy, with dire consequences for many industries—including the aircraft leasing industry. Western governments’ still-evolving sanctions regime has inspired retaliatory decrees by the Russian Federation, which collectively have engendered significant financial losses for companies doing business with Russian entities. As we previously reported, Western companies leasing an estimated $10 billion worth of aircraft to Russian airlines are facing a total loss of their property. Western governments have ordered lessors to repossess aircraft, but a Russian Federation decree mandates that Russian airlines not return (or “export”) such aircraft to their Western owners.
IKEA’s Billy bookcase—so popular that one is reportedly sold every 10 seconds—recently got even cheaper, at least for Russians. IKEA is holding a fire sale as the company closes its stores and exits the Russian market. The Swedish furnituremaker’s exit from Russia is just the latest in a string of actions by over 1,000 companies—including Disney, Goldman Sachs, IBM, McDonalds and Starbucks—that are curtailing operations in the country in response to the Russia/Ukraine conflict. As of June 2022, global companies fleeing Russia have reportedly racked up more the $59 billion in losses associated with their departure. Of course, this pales in comparison to the more than 10,000 civilian casualties and $600 billion in economic losses that Ukraine has suffered since the conflict began. But even though the corporate exodus from Russia for many companies is voluntary (and has even been used by some as a positive public-relations spin), Russia has threated to confiscate Russian-based assets of companies from countries that Russia considers hostile to its interests, and U.S. and EU sanctions may practically serve to prohibit some companies from operating in Russia, all of which highlights that additional risks lie ahead.