US lessor Aviation Capital Group has secured the return of a Boeing 737 Max 8 from Russia's S7 Airlines. Charles Taylor Aviation Asset Management (CTAAM) states in a LinkedIn post that it supported the lessor in repatriating the aircraft. A video posted by CTAAM identifies the aircraft as bearing the registration VQ-BGV, an aircraft Cirium data shows to be MSN 44297. The narrowbody is one of two Max 8s that Russian authorities in August approved S7 to return to ACG and Air Lease Corporation. CTAAM says the aircraft has been under its continuing airworthiness management (CAM) oversight since the suspension of S7 Engineering’s OTAR Part 39 Subpart F CAM approval. The asset manager adds that its technical and planning teams worked closely with all parties to obtain a special flight permit from the Bermuda Civil Aviation Authority. As a result, the aircraft could be ferried to a place of storage in the UK.

Swiss has introduced into passenger service its first Boeing 777-300ER partially covered with sharkskin-inspired, ribbed airframe surface film designed to reduce fuel consumption. The technology dubbed AeroShark was jointly developed by Lufthansa Technik and German chemicals manufacturer BASF. LHT says that part of the aircraft's fuselage and engine nacelles were recently fitted with approximately 950m² of riblet film. The MRO provider predicts this will reduce fuel consumption by just over 1%. As soon as calculated savings have been validated in flight operations, LHT says that Swiss and Lufthansa Cargo intend to roll out the technology across their respective 777-300ER and 777 Freighter fleets. Lufthansa-owned Swiss has 12 777-300ERs while the German cargo carrier currently has 11 777Fs, LHT notes. “Our adoption of AeroShark is an excellent example of how we can use innovative technologies to make air travel more sustainable,” states SWISS chief executive Dieter Vranckx. “We are proud to be the first passenger airline in the world to adopt this new technology. And we will continue to consistently invest in such sustainable solutions,” he adds.

Any Chinese invasion of Taiwan, resulting in sanctions and aircraft impoundments, would likely have a "severe financial impact" on aircraft lessors given the number of aircraft they have on lease to Chinese airlines, analysts at DBRS Morningstar have warned. While not the ratings agency's "baseline scenario", an outright invasion of Taiwan would likely result in "meaningful" economic sanctions and counter-sanctions between China and the West, not to mention the potential for significant military action, DBRS Morningstar writes in a 12 October research note. It adds that any prohibitions on the sale or lease of Western-manufactured aircraft and aviation parts to China along similar lines to those imposed on Russia would have a "material negative" impact on all participants in the aviation industry globally, including OEMs, the supply chain in its entirety, and aircraft lessors. Any nationalisation of aircraft by China, meanwhile, would have a "meaningfully negative hit" on aircraft lessors, which may be forced to take large writedowns and lose a sizable portion of revenues and cash flows. In addition, it would further disrupt capital markets as investor demand for aircraft asset-backed securities has already been reduced by the ongoing Russia-Ukraine conflict, note DBRS Morningstar's David Laterza, senior vice-president of global FIG, and David Petu, vice-president of US structured credit. They see the involvement of Chinese lessors in the domestic commercial aviation industry as creating a "natural limit" to exposure to China by foreign lessors. Yet, given the sheer size of the market, China still represents one of the largest country exposures for several major global aircraft lessors. DBRS Morningstar, Cirium data, estimates that there are 740 leased aircraft not domiciled in China that could be seized. The lessor with the highest exposure is AerCap, with 243 aircraft on lease to Chinese airlines as of end of September 2022. BOC Aviation has the second-largest exposure (76 aircraft) and Air Lease Corporation the third (66). Some 20% of China's fleet is leased from overseas lessors, adds DBRS Morningstar. "Importantly for AerCap, nearly 55% of these aircraft were comprised of the most popular and highly sought-after newest-technology Airbus A320neo and A350 family and Boeing 737 Max and 787 family aircraft, a significantly higher new-tech aircraft composition relative to the fleet on lease to Russia," the researchers note. DBRS Morningstar reiterates that large-scale aircraft fleet nationalisation by China is a "remote" possibility. Global aircraft lessors and the aviation industry have not yet fully realised the financial implications of Russia's invasion of Ukraine and the ensuing nationalisation of the aircraft leased by Russian airlines from foreign aircraft lessors, but DBRS Morningstar expects that lessors would have already adjusted risk management to account for Russia's actions. As of September 2022, Chinese airlines operated around 2,100 Airbus and 1,630 Boeing aircraft, or 18% and 15% of the total Airbus and Boeing commercial fleet, DBRS Morningstar states, again citing data. In addition, Chinese airlines accounted for approximately 9% of the combined backlog for both OEMs (1,141 aircraft on order or with signed LOIs, of which 42 aircraft are on order through lessors). DBRS Morningstar believes that, while already large, the true size of aircraft orders from Chinese airlines is understated as not all aircraft lessors report orders received from airlines.