AirBaltic Leases Ukrainian Aircraft Due to Shortage of Airbus A220 Spare Parts

In one of the most tangible demonstrations of the how geopolitics, economics, and the pandemic have affected airlines, AirBaltic will operate a Boeing 737-900 owned and crewed by Ukraine International Airlines (UIA) this summer.

The arrangement, called a "wet-lease," will see UIA base a 737-900 and four flight crews totaling 28 staff at AirBaltic's home airport in Riga, Latvia. The aircraft is expected to operate on routes between Latvia and Europe, including to Berlin, Brussels, Copenhagen, Madrid, and Oslo, UIA said in a statement.

UIA suspended flights on February 24, when Russia invaded Ukraine. The airline has extended its suspension several times and now says it will remain grounded until at least May 31, depending on the state of the war at that time. Shortly after the war began, UIA said it had moved its aircraft and many of its flight crews out of the country. The carrier began soliciting wet-lease arrangements in March.

"We are sincerely glad that our European partners are helping both the Ukrainian state and business with a clear, absolutely transparent support for Ukraine," UIA CEO Evheniy Dykhne said. "This is especially true against the backdrop of the recent decision by UIA Compliance not to wet-lease its aircraft to operators that continue to fly to Russia. This narrows down the scope of opportunities, but it is fully consistent with our morality."

Latvia, a former Soviet republic, has been among the most vocal supporters of Ukraine in the face of Russian aggression and has seen an influx of refugees from the war and emigres from Russia.

"It is now a very challenging time for the Ukrainian people and their national airline," AirBaltic CEO Martin Gauss said in a statement. "By temporarily wet leasing their aircraft, we are also providing short term work to the employees of Ukraine International Airlines.”

A Boeing 737 is not a logical match for AirBaltic, which operates a fleet of 32 Airbus A220s, the European airframer's smallest offering. The carrier is expecting summer demand to be high, a spokesperson said, but that is not the only reason it is wet-leasing the UIA 737.

The airline is running straight into the supply-chain and shipping constraints that have bedeviled not just Airbus and its suppliers but the entire global economy. AirBaltic is having difficulty sourcing spare parts for its A220s, resulting in the aircraft spending more time out of service and in maintenance, the spokesperson said. This required the airline to resort to wet-leasing. The spokesperson said the length of the wet-lease depends on AirBaltic's ability to secure spare parts to return its entire A220 fleet to the air.

During the pandemic, suppliers sharply reduced their workforces, and as manufacturing began to spool back up last year, analysts worried that Airbus, in particular, would not be able to realize its ambitious production goals. The airframer said earlier this year it has worked the kinks out of its supply chain and can raise production rates for all its aircraft types. But suppliers have expressed concerns about hiring enough skilled workers in a tight labor market, and have had difficulty spooling production back up.

But the supply of spares is another matter altogether. The global shipping crisis, which has snarled supply chains just as manufacturers are aggressively restocking, is affecting the availability of spares. Compounding the problem is the rising cost of energy, and access to Russian aviation-grade titanium, now subject to Western sanctions.