Half of Russia's A320/A321neo Fleet Grounded Amid Engine Issues and Sanctions
aviacionline.com
aviacionline.com
And ultimately that's what imposes economic costs.
It'll be curious how much of the gap is filled by substitute Chinese goods. (E.g. the domestic CFM-alternative engine projects [0])
With the wrinkle that Russia and China are united by their geopolitical opponents more than their friendship, and Xi doesn't seem thrilled about shackling the Chinese economy to the consequences of Russian war.
Massive difference between airliners and aircraft. Russia has not shown itself capable of mass manufacturing airliners. (Or even advanced aircraft for that matter.)
That said, as a petro state, they’re fine running inefficient engines across their skies.
Now look at them post sanctions.
The SSJ-100 contains far more important systems (not parts) [1] than e.g. Embraer’s regional jets. It was designed with consultation from Boeing, including throughout manufacturing. Russia’s indigenous jets are terrible, and there is no reason to expect them to improve, they can’t compete against the Chinese for the anti-Western market.
To be fair to Sukhoi, this is how Boeing builds planes. If America were sanctioned by its allies, I’d similarly argue that Boeing, too, is incapable of mass manufacturing airliners.
[1] https://web.archive.org/web/20190402154855/https://www.uacru...
Embraer jets all use Pratt & Whitney engines which is the hardest part to replace.
> they can’t compete against the Chinese for the anti-Western market.
All Chinese jet airplanes use Western engines and other systems[0][1]. China can't sell them on the anti-Western market just like Russia wasn't allowed to sell Tu-204SM with PS-90A2 engines co-developed with Pratt & Whitney[2].
[0] https://en.wikipedia.org/wiki/Comac_C909
[1] https://en.wikipedia.org/wiki/Comac_C919
[2] https://en.wikipedia.org/wiki/Aviadvigatel_PS-90#PS-90A2
Yes, of course. The version of SSJ-100 with Russian-made engines and other systems is called SJ-100.
[0] https://www.uacrussia.ru/ru/aircraft/lineup/civil/superjet-1...
We have been hearing this never-ending story of "aircraft will be available in 2 years" for a very long time. :)
> Regulatory and market conditions do not currently permit the Funds to conduct transactions in the local Russian market.
[0] https://www.reuters.com/business/finance/limited-russian-sto...
[1] https://www.vaneck.com/us/en/blogs/emerging-markets-equity/r...
That said, I’m not finding anything about Russia prohibiting foreign investment, but I am finding a lot about sanctions prohibiting dollar and Euro investment in Russia.
Growth that depends entirely on government spending can only last so long... First you blow all your reserves, then if/when you start printing money and hyperinflation kicks in even if the nominal GDP in the domestic currency appears to be rising, real GDP falls fast.
Because Russia's essentially a petro-state, they had sizable cash reserves with which to prop up their economy. Now you can see with the price of the Ruble that they've run out of the will to prop it up using foreign reserves (probably running low on foreign currency) and most estimates of their economic growth is that it'll stall or they'll see a recession for 2024 and beyond.
> The US & EU are not serious about winning this war, mostly because they don't have confidence in themselves that they can.
You're right that the west isn't serious. It's not that they don't think we can, it's that they're afraid the slightest hit to our living standards will erode support. While they might be right, we're sleepwalking into an even worse scenario...
It’s not that simple. I don’t think Russia is low on foreign currencies. Due to sanctions and effects of war spending Russian economy doesn’t behave as a normal one. Recession is going to happen, sure, because the current high demand on domestic market is matched by credit-driven growth of supply. As soon as war spending drops, demand weakens and interest rate drops, but some of the businesses which play the chicken game with central bank will have problems. So yes, recession is going to happen. But they will not burn foreign reserves to zero, simply because some of them are frozen and some are in rupees and yuan, which are not easily convertible.
It's definitely "low" on the $327B or so in its sovereign foreign assets that were seized Brussels shortly after the 2022 invasion -- apparently about half its total (of $600+).
The seizure obviously didn't kill the economy, but it would be surprising if it didn't set off a chain of effects within the Russian economy. We may be seeing that now in the form of the precipitous rise in the benchmark interest (to 21 percent).
It’s macroeconomic basics: government is spending a lot, domestic demand increases and doesn’t match the supply, which cannot be balanced by imports (which would require spending of foreign reserves). The economy is gradually overheating, inflation is rising, so the central bank attempts to control it, because its only target is the inflation. That’s as simple as that.
2. Some manufacturing sectors of Russian economy do have problems, which do not hinder manufacturing capacity today but will have more long term effects. Chances are high that this will simply help China to become more competitive at the cost of Western producers of manufacturing equipment and electronics. They do not want confrontation with the West, but will use any opportunity to replace Western companies. Civilian aircraft production is going to be even more localized without the Western engines and may gradually catch up with the demand.
3. Sanctions on oil and gas trade simply do not work and are bigger pain for Europe than for Russia. You cannot cut off major supplier of hydrocarbons without full support of all the biggest consumers. It still goes on, just in other currencies (which may have negative long term impact on use of USD in international trade). Yes, Russian producers do suffer, but nothing really bad is going to happen to them.
4. Unofficial "Cancel culture" sanctions (Western brands pulling off Russia) have negative effect mostly on the Western businesses which may have lost one of their biggest customers, like some German companies. The assets are simply being taken over and they continue to contribute to Russian economy (and paying taxes) after some delay, switching to Chinese supply chain (e.g. car production). At best they will be paying double or triple price to return to the market later, at worst they will get more competition. It will be interesting though to see, how competition in digital services will evolve. For example, YouTube cannot be replaced by anything even when it does not sell ads or premium accounts in Russia.
To summarize, sanctions did not work. They did not and could not stop the war. The most damage Russia has inflicted on itself: excessive military spending increased inflation, from which civil servants and pensioners are going to suffer the most. Attempt to control it is going to result in major recession soon. Besides, massive emigration wave has put a lot of pressure on the job market and immigration from Central Asia can no longer mitigate it, because the attempt to recruit more soldiers from immigrants has scared many of them.
I still believe that the best strategy for the West should have been avoidance and deescalation, and then, when all opportunities were missed and the war started, US and UK should have deployed their military in Ukraine honoring the spirit of Budapest agreements. It was not wise for Ukrainian leadership to choose a side and push for NATO membership, but it was stupid for USA to leave the doors open, promise things that led to more escalation and then let the country slowly burn. This war is a major failure of Western diplomacy and lack of adequate strategy in Eastern Europe.
Well it's pretty clear the sanctions were never intended, by themselves, to stop the war. But it's not like the Western nations really had any other choice.
Fundamentally, sanctions are more about framing -- making it clear to Russia's regime that it simply won't be possible to continue doing "business with usual" with the West after it crossed the line that did.
I agree with you that Western pre-war policy was largely a failure, and certain things should have been done differently. But now that Russia's regime took the action that it did --- it must be opposed, and in any case not simply "greenlighted". Which a refusal to impose sanctions (or substantially help Ukraine in its defense) would have amounted to.
No, of course not. But it's clear they've burned through enough that they've given up trying to prop up the Ruble, as they did in 2022.
There's no advantage for them to have the Ruble so weak because they absolutely want to import Chinese and Western products, namely technology, to fund their war machine. Even against the Yuan, the value of the Ruble has nearly halved since June 2022. That's not good for a nation that needs to import things...
The fact is, they do not target exchange rates in their policy, only inflation. Their trade balance with China is positive (unlike USA), so yuan reserves are growing and they have no problem to buy Chinese goods. The weakness of ruble has nothing to do with it.
This is false. I don’t know where you have got this, when all information is public and easily available. Here’s how the official exchange rate us determined:
https://cbr.ru/Content/Document/File/162004/metod_6290-u.pdf
They just collect the data on OTC transactions from banks. The only way for Russian central bank to influence the exchange rate is to sell/buy and they do it only to stabilize the market when volatility is high. They do not have exchange rate targets and do not enforce specific rates in transactions.
You missed the goal of sanctions on Russia?
> MIL complex is on over drive
This is correct. The Russian economy is doing fine.
> mostly because they don't have confidence in themselves that they can
This is wrong. It’s a resource-commitment problem. Not one of capabilities or confidence.
The Russian economy is doing "mixed". It's a war economy which can be propped up for quite a while but it has significant structural issues that will take years to repair. The country won't fail, but it will further struggle because of the decisions made my leadership.
I find this general attitude of "Russia has no issues" that are going around on the internet quite confusing if pretty much every economic indicator says otherwise. Let alone the fact that a meaningful part of the working population is fighting or left the country rather than engaging in the economy.
It’s removing itself as a conventional threat to Europe for generations to come. And as much as Beijing is a rival to Washington, they’re rational in a way Moscow is not. Russia as a Chinese suzerainty is probably a better world configuration than Russia as a sovereign regional power.
> find this general attitude of "Russia has no issues" that are going around on the internet quite confusing if pretty much every economic indicator says otherwise
The sanctions’ goal was to cripple the Russian economy in a militarily-relevant way. On this they failed and that has been widely discussed. Folks might be extrapolating that discussion inappropriately.
How? Surely not in military sense. If anything, they gained experience of modern drone warfare and tested and refined their technology.
Any limited success they had before was in what can't be called a conventional confrontation, like separatist movements.
On top of all the damage done to them, and their advanced EW capabilities that have been captured and sent for analysis in the US, and exact knowledge of things like Kinzhal, the lost flag ships and submarine, the modern sea drones - this war is a disaster for Russia.
The US and EU aren’t even involved and Ukraine is holding its ground. Russia is doing so poorly that they’re not even considered a threat anymore in the West.
Their “GDP” numbers belie systemic economic weaknesses that show up when they have to BARTER for food. That’s how worthless their currency is.
Russia is basically completely pathetic at this point - they can terrorize countries that share a land border with them but can’t project power even past Ukraine.
They had to import starving North Koreans with antique shells and Iranian RC toys. Some superpower.
The US and EU don’t care about the war in the same way someone with a Ferrari doesn’t have to race someone with a Honda Civic - because they’re not a threat. Let the person in the Honda rev their engine and scream that they’d win - they’re just stupid. They look stupid.
They’ve lost what, 500k soldiers? They’re so much weaker than the Soviet Union it’s laughable.
The rest of the world disrespects them so much that they had $300B worth of Russian assets outside their country - and they were all seized. That was half their famed “sanction proofing”! What are they going to do about it? Nothing.
They have “hot” GDP based on faux demand for wartime goods - as they trade Rubles for oranges because nobody wants their currency. Does that sound viable to you? Laughable.
This will be Europe’s first post-War test of security integrity.
My suspicion is it will fail—that Europe as a single force, versus collection of countries crowded on a continent, is an American invention, and without American strength will dissolve divided. But my hope is it will succeed.
I mean yes, we did. Western Europe was unifying under Berlin in the 1940s.
> by convincing Eastern European countries to trust their protective umbrella rather than the French-German domination
Militarily speaking, modern Germany is irrelevant. (Partly due to how it’s been managed post-War.) Especially to Eastern Europe, whose security concerns require a nuclear umbrella.
Trump and conservatives complain mightily about EU underspending on defence, but that's been by American design. While the EU was/is dependent on the American security umbrella, the US had a lot of leverage over Europe. The carrot was "you don't need to spend so much on defence, we've got you covered" and the stick was "shame if we didn't have you covered anymore, since you've been underspending for so many years.
Source on that? No documented cases in history of U.S. sanctions ever ending.
(Which is why from a game theoretic point of view the only winning move is import substitution, not kowtowing to whatever terrorist demands.)
Sanctions on Iran were relaxed in exchange for partial cooperation: https://en.wikipedia.org/wiki/International_sanctions_agains...
I would say that Vietnam also shows that economic relations can improve a lot even without a fundamental change in the regime.
China is also an example where economic relations improved.
I don’t see any reason to think that sanctions can’t be lifted. But it may require a complete collapse of Putins regime/party for it to happen on a short timescale. Is there any reason to think USA wouldn’t be willing to open up to a new leadership if they have a radically different attitude and pull out of Ukraine?
If Russia turns into something like North Korea or Iran, then yeah, the outlook is not good. But why should it be?
From a game theoretical point of view: I don’t think any leader of any country wants to end up like North Korea, so the precedent being set is good.
No. None of the sanctions levied against the USSR were lifted and still technically apply to Russia. (Enforcing them is another matter.)
> I don’t think any leader of any country wants to end up like North Korea
North Korea is doing better than South Korea on every metric except "consumer goods availability" and "international relations". Not sure you're making your case here.
> ...or Iran
Iran is more modern, developed and free than any other middle eastern country. (That includes Israel.)
Your ideas are wildly out of sync with actual reality.
This is very, very false and a pretty strong signal there's no useful discussion to have here.
It's a lie. Sanctions actually began to be lifted in 1989 (Jews were finally allowed to emigrate) when we received 80486 processors. In 1990, we got our first SS7 switches and equipment for the first two mobile networks. It was a big thing.
> North Korea is doing better Too bad they are not allowed to tell this here, because internet access is available only to several hundreds people :)
> Iran is more modern, developed and free than any other middle eastern country. (That includes Israel.) Nice joke :)
In general flying in Russia has been a pretty questionable experience since the beginning of the war. Their regulator is still barely functional at this moment and a lot of secrecy is happening. For instance you will find barely any incidents reports any more.
We have been intentionally avoiding Russian airlines for flights in and out of Russia for our family for the last few years due to safety concerns.
Not very hard, now that reports are no longer publicly available. Prior to 2022 you would still find that information on avherald and other places. That said, even with the little amount of information going out, in the last 5 years alone Russia had at least 8 hull losses with more than 80 fatalities.
Do we count the (possible) "on-purposes" in the accident† count?
* https://www.bbc.com/news/world-europe-66599733
† "Accident" is discouraged as a term, generally speaking: https://crashnotaccident.com
>According to Andrei Kramarenko, a leading expert at the Institute of Transport Economics of the Higher School of Economics, passenger traffic in Russia has almost stopped growing due to insufficient supply. In September, Russia's Ministry of Transport revised its annual forecast to last year's level of 103 million passengers carried by aircraft.
>Seat occupancy on Russian passenger planes this summer reached 93-95 percent. The expert believes that the situation will fail to improve next year, which may prompt airlines to simultaneously reduce average annual flight times and maximize redistribution of their share of seat supply toward the summer when effective demand and ticket margins are several times higher.
So basically it seems that their airlines are stretched thin.
[1] - https://en.belsat.eu/83600150/russia-half-of-airbus-a320-and...
Unconditional surrender, with a complete cultural restructure and admitting to the atrocities, and prosecuting everyone responsible is a good start.
But of course, that won't happen anytime soon.
What? They don't want to?
Then maybe we can just forget about the genocide, give Russia time to rebuild their forces and recover their economy, so they can repeat the process in a couple of years?
(While allowing them to continue their genocide on occupied territory. But at least we don't have to read about it!)
Anything else is about as worthless as "Peace for our time" from Munich 1938.
i do object to your use of the word "genocide" when there is a literal U.S. backed genocide occurring right now in gaza
You just want to close your eyes to the Russian genocide.