A big bank is in trouble, and no one knows which one or why

[B. Kidd]

My guess is Citibank.

 

[SavannahMann]

Actually, this is Putin.

Let me explain. The Russian Airline Aeroflot leases more than half of their airplanes. About 515 planes. Those leases are now shot to shit thanks to the Sanctions that prevent Aeroflot from flying anywhere. Additionally, the planes can’t get required maintenance and checks. Those are required to maintain air worthiness certificates for international travel.



That comes to billions of dollars worth of aircraft. The companies that bought and now lease the planes to Aeroflot expect payment. And Putin has Nationalized those aircraft, which means the companies are out of the money. They being smart have insurance on their assets, which means insurance companies are going to have to pay billions of dollars for Russia’s theft of property.

Air Lease says Russian law on leased jets could help in claiming insurance

A new Russian law on leased aircraft showed Moscow could "confiscate" planes and such a move might help it claim insurance, Air Lease Corp said at a time when leasing firms risk writing off jets stranded in the sanction-hit country.

www.reuters.com

Not to mention of course, the hundreds of millions of dollars that Aeroflot will not pay to settle up bills internationally. Airport fees, fuel costs, and all that other stuff.

So banks that hold the CDS, or Credit Default Swaps, or Insurance policies if you prefer, will be paying out billions of dollars.

This was the only return action that Putin could play in response to the Sanctions, and it has one result possible. Yes, there will be a hit to some banks as they absorb billions in losses. Yes, there will be a hit to the related economies. But it will be a drop in the bucket compared to Russia.

Aeroflot will never again be able to lease another aircraft. Even if the Sanctions are lifted, nobody will enter into any contracts with them, ever again. And before you dismiss that, remember that of the more than 900 aircraft, 515 were leased. So Putin’s move has destroyed Aeroflot in the long run. Nobody will want to do business with them again, and will demand cash up front before any services are provided. With the shutting down of SWIFT, it would mean a suitcase full of cash, literally, with the pilot who tried to service and fuel the plane for a trip.

And none of those aircraft will ever be able to fly internationally on commercial routes ever again. Without those airworthiness certificates, before another could be issued, the plane would have to be stripped to the frame, and a vast majority of components replaced. In other words, the plane would have to be restored to factory original, with factory parts. With the work done at an approved facility. That would cost more than buying a new plane.

The rules for Commercial Aviation are strict, especially international flights, and we all like it that way, because it means that planes and pilots who fly those routes are held to a very high standard. It makes airplane crashes rare, keeping air travel as the safest way to move to your destination.

So this is largely Putin’s fault. All he had to do was stay in his own Country.

 

[CrusaderFrank]

Actually, this is Putin.

Let me explain. The Russian Airline Aeroflot leases more than half of their airplanes. About 515 planes. Those leases are now shot to shit thanks to the Sanctions that prevent Aeroflot from flying anywhere. Additionally, the planes can’t get required maintenance and checks. Those are required to maintain air worthiness certificates for international travel.



That comes to billions of dollars worth of aircraft. The companies that bought and now lease the planes to Aeroflot expect payment. And Putin has Nationalized those aircraft, which means the companies are out of the money. They being smart have insurance on their assets, which means insurance companies are going to have to pay billions of dollars for Russia’s theft of property.

Air Lease says Russian law on leased jets could help in claiming insurance

A new Russian law on leased aircraft showed Moscow could "confiscate" planes and such a move might help it claim insurance, Air Lease Corp said at a time when leasing firms risk writing off jets stranded in the sanction-hit country.

www.reuters.com

Not to mention of course, the hundreds of millions of dollars that Aeroflot will not pay to settle up bills internationally. Airport fees, fuel costs, and all that other stuff.

So banks that hold the CDS, or Credit Default Swaps, or Insurance policies if you prefer, will be paying out billions of dollars.

This was the only return action that Putin could play in response to the Sanctions, and it has one result possible. Yes, there will be a hit to some banks as they absorb billions in losses. Yes, there will be a hit to the related economies. But it will be a drop in the bucket compared to Russia.

Aeroflot will never again be able to lease another aircraft. Even if the Sanctions are lifted, nobody will enter into any contracts with them, ever again. And before you dismiss that, remember that of the more than 900 aircraft, 515 were leased. So Putin’s move has destroyed Aeroflot in the long run. Nobody will want to do business with them again, and will demand cash up front before any services are provided. With the shutting down of SWIFT, it would mean a suitcase full of cash, literally, with the pilot who tried to service and fuel the plane for a trip.

And none of those aircraft will ever be able to fly internationally on commercial routes ever again. Without those airworthiness certificates, before another could be issued, the plane would have to be stripped to the frame, and a vast majority of components replaced. In other words, the plane would have to be restored to factory original, with factory parts. With the work done at an approved facility. That would cost more than buying a new plane.

The rules for Commercial Aviation are strict, especially international flights, and we all like it that way, because it means that planes and pilots who fly those routes are held to a very high standard. It makes airplane crashes rare, keeping air travel as the safest way to move to your destination.

So this is largely Putin’s fault. All he had to do was stay in his own Country.

Interesting except the last sentence.