Sanctions on Russia

Nancy Gomez26 said:Here’s the news: Delta Air Lines just bought out eight aircraft that were previously under lease agreements. They paid them off, even though the Federal Reserve essentially 'reclassified' them in their books. It suggests that the folks over at Delta actually grasp the long-term fallout of ignoring lease contracts—something the politicians failed to consider when they decided to bend the rules to suit their immediate interests.
Link.

Slow down—that's only 8 out of 400 (and 8 out of those 12 massive Boeing 777s, which might be the only way they stay afloat).

They probably snagged these for pennies on the dollar—once you factor in the blocked returns and the fact that official servicing is shot, the value drops for everyone involved.

And I’m fairly certain they picked them up for pennies on the dollar. I can't say for sure, but it feels like the only logical conclusion...

slyfox43 said:What makes high-end Chinese goods feel expensive isn't actually their origin, per se.

Is it just clever marketing?

Or perhaps just pure branding?

wiredseal7 said:Slow down—that's only 8 out of 400 (and 8 out of those 12 massive Boeing 777s, which might be the only way they stay afloat).

They probably snagged these for pennies on the dollar—once you factor in the blocked returns and the fact that official servicing is shot, the value drops for everyone involved.

I suspect Delta Air Lines essentially bought out their leasing agreements to settle up. Once Putin decided to seize those leased aircraft, he triggered a domino effect of complications for any airline holding such assets. First, there is the immediate issue of defaulted payments and the legitimate risk of seizure by leasing companies or insurers if these planes ever land outside of Russia. Then comes the maintenance nightmare. In aviation, every single service and every component must be certified and documented meticulously. It is highly probable that no one outside of Russia will touch these planes—even if all lease payments were settled—because the maintenance records are now considered non-transparent. Their value effectively hits zero, or rather, just the scrap value of the raw materials. The leasing companies might actually come out ahead; these aircraft are insured against precisely this kind of scenario, and with a current surplus of aircraft on the market keeping lease rates low, the removal of these units from the global pool will actually benefit the industry. The ones footing the bill will be the insurance companies. However, they will recoup those losses later by labeling Russia a high-risk jurisdiction, which means higher premiums moving forward. Ultimately, the cost falls on the passengers flying within Russia. As usual, the citizens end up paying the price for questionable political decisions made in the past. And who else would?

Nancy Gomez26 said:I suspect Delta Air Lines essentially bought out their leasing agreements to settle up. Once Putin decided to seize those leased aircraft, he triggered a domino effect of complications for any airline holding such assets. First, there is the immediate issue of defaulted payments and the legitimate risk of seizure by leasing companies or insurers if these planes ever land outside of Russia. Then comes the maintenance nightmare. In aviation, every single service and every component must be certified and documented meticulously. It is highly probable that no one outside of Russia will touch these planes—even if all lease payments were settled—because the maintenance records are now considered non-transparent. Their value effectively hits zero, or rather, just the scrap value of the raw materials. The leasing companies might actually come out ahead; these aircraft are insured against precisely this kind of scenario, and with a current surplus of aircraft on the market keeping lease rates low, the removal of these units from the global pool will actually benefit the industry. The ones footing the bill will be the insurance companies. However, they will recoup those losses later by labeling Russia a high-risk jurisdiction, which means higher premiums moving forward. Ultimately, the cost falls on the passengers flying within Russia. As usual, the citizens end up paying the price for questionable political decisions made in the past. And who else would?

Yeah, exactly—sanctions usually have a loophole for buying out planes once a lease expires, which is what Delta Air Lines used here.

But we’re talking about maybe 8 planes out of 400.
Plus, a Boeing 777 is probably overkill for short domestic hops, so that plays into the decision too.

I wonder what they’ll even do with them. Buying them just to let them rot isn't an investment. Maybe they'll try re-registering them under a foreign carrier to make them useful again.

As for the price, if the leasing companies aren't losing money, the insurers have every incentive to push for a sale—they might even chip in to settle things.

Premiums are going up regardless of whatever Delta Air Lines does. The risk isn't coming from the airline itself; it's the sanctions and counter-sanctions. That risk stays tied to Russia no matter how much diplomacy improves.

https://www.swissinfo.ch/eng/switzer...tions/47590508

Once the dust finally settled, the Swiss decided to unfreeze about a third of those Russian assets.
Well, I guess we overshot the mark on that one...

wiredseal7 said:https://www.swissinfo.ch/eng/switzer...tions/47590508

Once the dust finally settled, the Swiss decided to unfreeze about a third of those Russian assets.
Well, I guess we overshot the mark on that one...

My apologies, perhaps I was a bit too hasty in my assessment.

Although an additional CHF2.2 billion were blocked, CHF3.4 billion were released again after being frozen on a precautionary basis.

“The number of frozen assets is not an indicator for how effective sanctions are implemented,” Bollinger said. “The numbers can fluctuate in both directions.”

Swiss banks and asset managers can provisionally freeze funds but funds need to be released if they cannot establish that the assets are directly owned or controlled by a sanctioned individual.

So, what we have here is quite simple: they unblocked money that had been held merely as a precaution. Once it was determined—or rather, once it could not be proven—that the funds actually belonged to sanctioned individuals, the money was released. Aside from that, they did freeze an additional 2.2 billion francs, but does that truly matter? They will undoubtedly overreach again soon enough.

wiredseal7 said:Yeah, exactly—sanctions usually have a loophole for buying out planes once a lease expires, which is what Delta Air Lines used here.

But we’re talking about maybe 8 planes out of 400.
Plus, a Boeing 777 is probably overkill for short domestic hops, so that plays into the decision too.

I wonder what they’ll even do with them. Buying them just to let them rot isn't an investment. Maybe they'll try re-registering them under a foreign carrier to make them useful again.

As for the price, if the leasing companies aren't losing money, the insurers have every incentive to push for a sale—they might even chip in to settle things.

Premiums are going up regardless of whatever Delta Air Lines does. The risk isn't coming from the airline itself; it's the sanctions and counter-sanctions. That risk stays tied to Russia no matter how much diplomacy improves.

The source of the risk lies in political decisions, which represent an unpredictable variable for insurance companies. This differs from most other risks where you can calculate probability with reasonable precision. Politicians can simply decide and legislate whatever they please, particularly within an autocratic system. Any nation can act this way, though some certainly do so more frequently than others.

wiredseal7 said:https://www.swissinfo.ch/eng/switzer...tions/47590508

Once the dust finally settled, the Swiss decided to unfreeze about a third of those Russian assets.
Well, I guess we overshot the mark on that one...

Yes, they likely overplayed their hand. They need those funds unfrozen just so they can skim off the top for "account maintenance" and other various overhead costs. Bankers always prioritize their own pockets first; looking out for themselves comes long before anyone else.

Check out this chart regarding gas, super relevant stuff...
Most of the new LNG capacity being built right now is happening here in the US. And honestly, if you look at the sheer volume of potential projects that could actually get the green light, I’d bet my bottom dollar most of those will be based in the States too. It’s pretty obvious that high energy prices in Europe are going to jumpstart a ton of projects that were previously just sitting on a desk gathering dust, especially once the European Union finally realizes they absolutely have to lock in some long-term contracts to stay afloat.
https://www.offshore-energy.biz/wp-c.../image9yix.jpg

wiredseal7 said:Yeah, exactly—sanctions usually have a loophole for buying out planes once a lease expires, which is what Delta Air Lines used here.

But we’re talking about maybe 8 planes out of 400.
Plus, a Boeing 777 is probably overkill for short domestic hops, so that plays into the decision too.

I wonder what they’ll even do with them. Buying them just to let them rot isn't an investment. Maybe they'll try re-registering them under a foreign carrier to make them useful again.

As for the price, if the leasing companies aren't losing money, the insurers have every incentive to push for a sale—they might even chip in to settle things.

Premiums are going up regardless of whatever Delta Air Lines does. The risk isn't coming from the airline itself; it's the sanctions and counter-sanctions. That risk stays tied to Russia no matter how much diplomacy improves.

Right now, they're flying them over to countries that haven't jumped on the sanctions bandwagon, mostly places like Turkey:
A333 (RA-73782/VQ-BQX)
A333 (RA-73783/VQ-BQY)
A333 (RA-73785/VQ-BPI)
A333 (RA-73787/VQ-BPK)
A333 (RA-73788/VP-BDD)
A333 (RA-73789/VP-BDE)

It looks like the Russians are trying to smooth things over however they can, since the A320 and 737 families are basically keeping their domestic flights running, and even their homegrown planes, like the SSJ100, rely so heavily on parts from the West that they probably won't stay flight-ready for very long anyway. If nothing else, at least they can use them to scavenge parts from planes sitting in boneyards.

https://travelradar.aero/russia-to-b...tu-204-planes/

wiredseal7 said:Solving a lack of strategic reserves (infrastructure) through seizures? Just the American way... reminds me of what happened with Citgo.

Maybe they should try building something themselves for a change.
They've even got those hidden pockets up in northern Germany—so there's your solution for gas and oil.

Here you go, my friend.

I am eagerly awaiting your scathing critique.

Russia Nationalizes Renault Plant, Revives Soviet-Era Moskvich Car

https://www.themoscowtimes.com/2022/...tch-car-a77685

The Russians have nationalized the Renault plant and are moving forward with production of the Moskvich, as the regime deems the Moskvich to be the most rational choice for citizens living in this era of progress and prosperity.

Once again, sanctions have only served to strengthen Russia.

So, after that brief pause where they were basically just keeping everyone on minimum wage, McDonald's officially announced today that they’re pulling the plug on their entire business in Russia. They’re moving toward liquidating all their assets, and unfortunately, that means the staff is being left out in the cold and heading to the unemployment office. (Just a side note, McDonald's actually employs about 62k Russians)

https://www.reuters.com/business/mcd...rs-2022-05-16/

Exports to Russia compared to this time last year.

China is down by 50%.

https://twitter.com/IikkaKorhonen/st...86893271715840

It feels like China and Russia are teaming up to leave the West completely stripped bare.

Anthony Hill5 said:Here you go, my friend.

I am eagerly awaiting your scathing critique.

Russia Nationalizes Renault Plant, Revives Soviet-Era Moskvich Car

https://www.themoscowtimes.com/2022/...tch-car-a77685

The Russians have nationalized the Renault plant and are moving forward with production of the Moskvich, as the regime deems the Moskvich to be the most rational choice for citizens living in this era of progress and prosperity.

Once again, sanctions have only served to strengthen Russia.

I guess this whole situation is a bit more nuanced than it looks at first glance; it doesn't really seem like a classic case of aggressive nationalization where assets are just seized, but rather it feels like Renault opted to sell off its holdings in Russia to a state-owned enterprise 🤔

Kenneth Cruz67 said:I guess this whole situation is a bit more nuanced than it looks at first glance; it doesn't really seem like a classic case of aggressive nationalization where assets are just seized, but rather it feels like Renault opted to sell off its holdings in Russia to a state-owned enterprise 🤔

Yeah, they're offloading 68% of the company for a single ruble—plus an option to get everything back once things "normalize."

hollowdriver13 said:So, after that brief pause where they were basically just keeping everyone on minimum wage, McDonald's officially announced today that they’re pulling the plug on their entire business in Russia. They’re moving toward liquidating all their assets, and unfortunately, that means the staff is being left out in the cold and heading to the unemployment office. (Just a side note, McDonald's actually employs about 62k Russians)

https://www.reuters.com/business/mcd...rs-2022-05-16/

If I'm reading this article correctly, it looks like a new owner is stepping in to take over the restaurants so the workers can actually keep their jobs.

Kenneth Cruz67 said:I guess this whole situation is a bit more nuanced than it looks at first glance; it doesn't really seem like a classic case of aggressive nationalization where assets are just seized, but rather it feels like Renault opted to sell off its holdings in Russia to a state-owned enterprise 🤔

Renault has essentially handed over assets valued at 2.2 billion euros for the princely sum of a SINGLE ruble. There is some mention of a buyback option, though the specifics remain shrouded in mystery.

What’s the deal with our friends at AD Plastic? They’re tied directly to Renault and have production lines running right in Russia.
Exactly—and let's be real, there aren't even any sanctions on people actually buying vehicles over there. Plus, what are we going to do about the semiconductor shortage? Modern cars need chips, but everything is being diverted to the military, which is basically cannibalizing parts from washing machines and appliances just to keep up.
(And honestly, some European car manufacturers are doing the exact same thing regardless of the war).

AD Plastic is basically toast.
The sanctions are going to slowly grind everything down... it'll take more than just the weapons the West is sending over. You're going to see the real impact this fall.

Anthony Hill5 said:Here you go, my friend.

I am eagerly awaiting your scathing critique.

Russia Nationalizes Renault Plant, Revives Soviet-Era Moskvich Car

https://www.themoscowtimes.com/2022/...tch-car-a77685

The Russians have nationalized the Renault plant and are moving forward with production of the Moskvich, as the regime deems the Moskvich to be the most rational choice for citizens living in this era of progress and prosperity.

Once again, sanctions have only served to strengthen Russia.

Why would I condemn it? Who started the whole freezing assets and sanctions game first?
Russian moves are just a response to the economic war waged against them—you know, eye for an eye, tooth for a tooth.

I’d criticize it if it happened before all this, but Russia isn't the aggressor here—they're playing defense.

Besides, they did it to keep the company breathing and save jobs. That's actually responsible policy—unlike the European approach, where I assume some Frenchman will end up footing the bill for Renault with a few billion euros.

It's not even comparable to Gazprom, which would be pumping gas regardless of whether they were expropriated or not.

Anthony Hill5 said:Renault has essentially handed over assets valued at 2.2 billion euros for the princely sum of a SINGLE ruble. There is some mention of a buyback option, though the specifics remain shrouded in mystery.

Renault agreed to it? Well, can't blame them... no point complaining when the deal is already done.
They probably got some compensation—which is obviously being kept hush-hush because of that hysterical Zelensky administration running around lobbying and acting like clowns.

Pretty much like how the Russians agreed to buy the A330. Everyone's happy. 😁

wiredseal7 said:Why would I condemn it? Who started the whole freezing assets and sanctions game first?
Russian moves are just a response to the economic war waged against them—you know, eye for an eye, tooth for a tooth.

I’d criticize it if it happened before all this, but Russia isn't the aggressor here—they're playing defense.

Besides, they did it to keep the company breathing and save jobs. That's actually responsible policy—unlike the European approach, where I assume some Frenchman will end up footing the bill for Renault with a few billion euros.

It's not even comparable to Gazprom, which would be pumping gas regardless of whether they were expropriated or not.

Renault agreed to it? Well, can't blame them... no point complaining when the deal is already done.
They probably got some compensation—which is obviously being kept hush-hush because of that hysterical Zelensky administration running around lobbying and acting like clowns.

Pretty much like how the Russians agreed to buy the A330. Everyone's happy. 😁

The critics would argue that Russia essentially bought a Renault plant that can't actually build any Renaults—but let's not get bogged down in that.

I just hope the Russians working there realize that profits from selling some random Lada aren't going to save their jobs.