Volga-Dnepr Group, Russia’s largest cargo airline, has been subject of a court order to pay $203m. AerCap has sued Volga-Dnepr for $427m, alleging the airline continued using eight Boeing aircraft in Russia after lease terminations, despite claiming it needed Russian customs approval to return them. AerCap also accused Volga-Dnepr’s subsidiaries of illegally re-registering aircraft to Russia’s registry.
Volga-Dnepr’s challenges stem from Western sanctions imposed following Russia’s 2022 invasion of Ukraine, which have severely disrupted the airline’s operations, fleet management, and financial stability.
Western sanctions, including U.S., EU, and Canadian airspace bans, have barred Volga-Dnepr’s Boeing aircraft from operating in key markets. The Bermuda Civil Aviation Authority and Ireland revoked airworthiness certificates for Russian-operated aircraft, grounding Volga-Dnepr’s subsidiaries, AirBridgeCargo and Atran, which rely on 18 Boeing 747s and 6 Boeing 737s. This has limited the group to flying Russian-made aircraft like Antonov An-124s and Ilyushin Il-76s, primarily to Asia, reducing revenue streams.
Sanctions have cut off Volga-Dnepr from major markets like the U.S. and Europe, where it previously served industries such as aerospace, petrochemicals, and humanitarian logistics. The Russia-Asia market is smaller, making profitability difficult.
Sanctions also prohibit the supply of Western aircraft parts and maintenance services, forcing Russian airlines to harvest parts from grounded jets or rely on domestic alternatives, which compromises fleet reliability and increases costs. This has degraded the value of Volga-Dnepr’s leased Boeing aircraft, complicating lease disputes.
In 2023, a U.S. court ordered Volga-Dnepr to pay $406.2m to BOC Aviation for defaulting on leases for three Boeing 747-8 freighters operated by AirBridgeCargo, citing Russia’s seizure of the aircraft by restricting their operation outside the country.
These rulings, including the latest $203m order, contribute to a potential liability exceeding $1 bn across multiple lessors, severely straining Volga-Dnepr’s finances. The inability to return aircraft—due to Russian government bans on foreign-owned aircraft leaving its airspace—has left the airline liable for damages and lost aircraft value.
An Antonov An-124 freighter (RA-82078) has been stranded at Toronto Pearson Airport since February 2022, accruing over CAD 305,655 (USD 224,055) in parking fees by December 2022, with daily charges of CAD 1,065.60 (USD 781). Canada is considering transferring this aircraft to Ukraine, which would result in a total loss for Volga-Dnepr.
The Russian government has facilitated the re-registration of hundreds of foreign-owned aircraft to its domestic registry, against international law, preventing lessors from repossessing them. This has triggered massive claims from lessors.
Volga-Dnepr suspended operations of AirBridgeCargo and Atran in March 2022, which accounted for significant cargo capacity (e.g., AirBridgeCargo held over 40pc of Russia’s air cargo market). This has slashed revenue, with the group now reliant on its An-124 and Il-76 fleets, which face limited market access.
Sanctions have disconnected Russian banks from SWIFT, hindering Volga-Dnepr’s ability to collect payments. Many customers have also ceased business with Russian firms to avoid sanctions risks, further eroding income.
Prior to sanctions, Volga-Dnepr planned ambitious fleet growth, including orders for 29 Boeing 777 freighters and five Boeing 747-8s valued at $11.8 bn. These plans are now stalled due to sanctions and financing issues, with Boeing unlikely to deliver amid export controls.
In 2022, founder Alexey Isaikin, sanctioned by the U.K., withdrew as president and shareholder, transferring control to management to mitigate sanctions risks on foreign subsidiaries like CargoLogicAir (England) and CargoLogic Germany. This restructuring aimed to preserve some international operations but has not fully shielded the group from financial fallout.
The order is part of a broader wave of litigation against Russian airlines for failing to return leased aircraft after sanctions. The Russian government’s policy of blocking foreign-owned aircraft from leaving its airspace and re-registering them domestically has led lessors like BOC Aviation, AerCap, and others to pursue legal action.
Volga-Dnepr has attempted to negotiate aircraft returns to maintain goodwill with lessors for future business, but Russian government restrictions have hindered these efforts. The airline is also exploring alternative revenue streams, such as brokering shipments via other transport modes, but these are unlikely to offset its financial burdens.
Russia has allocated bns to buy out leased aircraft (e.g., 162 aircraft by March 2024) to legalize their use domestically, but Volga-Dnepr’s cargo focus makes this less feasible, as its aircraft are specialized and less suited for domestic routes. The country is also investing in domestic aircraft production (e.g., Il-96 for AirBridgeCargo), but these are less efficient and years away from scaling up.
