Due to the very high cost of building and maintaining planes, and the rights that need to be acquired before a new airline can start flying and bringing in business, aviation is one of the most high-risk industries that a newcomer can get into.
Even with a strong initial investment, many smaller airlines struggle to get the necessary traffic to get even remotely close to profit. Some of the most high-profile bankruptcies to take place in 2024 include low-cost carriers Spirit Airlines (SAVE) and Silver Airways in the U.S. and Lynx Air and Jetlines in Canada.
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After three years of war, aviation in Russia is looking increasingly bleak
However, while these carriers simply struggled to bring in the necessary passenger traffic, airlines in Russia were also affected by flying bans, sanctions, and the inability of their primary customer base to travel abroad.
After Russian troops broke into neighboring Ukraine in February 2022, Western countries responded with expansive sanctions that still largely failed to curb the aggression that is now in its fourth year. While the Trump administration’s turn toward Vladimir Putin now put the future of this under question, Russian planes are currently also banned from flying through U.S. airspace.
Related: Here’s How You Can Help Ukraine Without Giving Money
First reported by Russian outlet Izvestia, at least 30 mid- and small-scale airlines in the country are at a “burnout point” and face the risk of bankruptcy in the near future.
These include the country’s flagship carrier Aeroflot (AERZY) and large airline S7 as well as smaller regional carriers like Rossiya, Ural and Yakutia Airlines among others. Most face mounting debt and, lacking potential to get back to flying at numbers that would remotely mirror what was seen before the war, struggling to get creditors to agree to continued lease deals.
At least 30 Russian airlines are nearing bankruptcy in 2025.
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Russia’s largest private airline is also scrapping plans to build a major plane engine plant
The largest private airline in the country, Novosibirsk-based S7 just scrapped an $83.5 million project for a plant to build gas engine turbines that was initially approved in 2024 to replace Western jet parts that the country’s aviation industry lost to sanctions.
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The 30 airlines that are most at risk of going bankrupt in 2025 currently carry 26% of Russia’s domestic passenger traffic. Russian publications reporting on the situation estimated that the bankruptcies could result in the cancelation of over 400 domestic routes.
Based in the western region of Tatarstan and used to charter flights to remote parts of the country, Tulpar Air was one of the first regional airlines to formally file for bankruptcy protection in November 2024.
At the start of March, multiple reports of Russian citizens attempting to circumvent sanctions by smuggling airplane parts from the U.S. started to emerge; on Feb. 13, the Justice Department announced that it charged three Ohio residents working for a U.S. subsidiary of a Russian plane company with illegally taking plane parts to the country.
The Southern District of Ohio said that the four plane parts in question were valued at over $2 million. Prior to the full-scale war, Western Boeing (BA) and Airbus (EADSF) made up 66% of the aircraft used in Russia.
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