Russian President Vladimir Putin has signed a law allowing the country’s airlines to register airplanes leased from foreign companies and continue flying them, a maneuver likely to stoke Western fears of a mass default involving hundreds of jetliners.

Russian state media said the law, signed on Monday, will let Russian airlines keep their fleets and operate foreign planes on routes within Russia.

Many of the planes used by Russian airlines are leased from foreign companies, including several in Ireland, a member of the European Union. Last month, the EU banned the sale or leasing of planes to Russia as part of sanctions to punish Russia for invading Ukraine. It gave leasing companies until March 28 to end current contracts in Russia.

Last week, Russia’s air-transport agency advised airlines with foreign-registered planes not to take them out of the country because of the risk they could be repossessed.

Separately, sanctions prevent Western companies from providing spare parts and maintenance to Russian airlines, and analysts say it is unclear whether the planes are insured anymore.

The new law, part of Russia's measures to combat the sanctions, says it aims "to ensure the uninterrupted functioning of activities in the field of civil aviation."

It comes after Bermuda and Ireland, where virtually all foreign-leased jets operating in Russia are registered, said they were suspending airworthiness certificates on the jets because they could no longer be sure they were safe.

Re-registering jets in Russia would aim to keep them flying domestically by granting access to new safety approvals.

Various estimates place the number of foreign-owned planes operated by Russian airlines at around 500 or more, and the vast majority of them were inside Russia when the war started on Feb. 24. Aviation consulting firm Ishka estimates that the foreign-owned planes are worth $12 billion, nearly half of that by Irish-based lessors.

"We are in uncharted territory. We don't know if they will see these aircraft again," said Helane Becker, an aviation analyst for financial-services firm Cowen. "Our guess is that (Russian carriers) use up whatever parts they have and then start cannibalizing (parts) to keep aircraft flying, and when this is over everything gets sorted out."

According to aviation consultant IBA, the company with the most exposure to the war is Dublin-based AerCap, with 152 planes valued at nearly $2.4 billion that are flying, parked or stored in Russia or Ukraine.

A spokesperson for AerCap said 5% of its fleet by value is in the hands of Russian carriers. She referred to a Feb. 28 filing in which the company said it would comply with the wind-down of leasing planes to Russian airlines, and declined to comment further.

A spokesperson for another Irish lessor, SMBC Aviation Capital, said the company has 35 planes in Russia – IBA valued them at about $1.4 billion – and has issued termination notices for all leases with Russian airlines. The spokesperson said the company "is engaged with all relevant authorities," but declined to comment further.

Too small to survive

There are more than 100 aircraft-leasing companies, many of them too small to survive if they lose more than one or two planes, according to Vance Hilderman, CEO of AFuzion, an airline consulting firm based in Los Angeles.

"In the old days, Russia would kind of let you in. You'd bring a couple pilots in and you would repossess the aircraft at night, kind of undercover," Hilderman said. "But this is going to spur a whole new business of cat and mouse. The stolen aircraft won't be leaving Russian airspace."

Hilderman said that for the few remaining flights that leave the country – to Turkey and places in the Middle East and Asia – Russian airlines will only use planes that they own or lease from Russian lessors.

Leasing companies have recovered a very small number of planes. Aircastle, a Connecticut-based lessor, recovered a plane while it was stopped in Mexico City. SMBC Aviation Capital tried to repossess an Aeroflot jet in Cairo, but the plane was able to return to Moscow, according to The Air Current, an aviation-news site.

Becker, the Cowen analyst, said the law that Putin signed violates a decadesold treaty called the Chicago Convention that allows lessors to cross international borders and take back planes from defaulting customers.

According to IBA, S7 topped all Russian airlines with 101 planes on lease from non-Russian entities as of last week. Aeroflot was second at 89 aircraft. The most often leased planes are Airbus A320 and Boeing 737 jets, both workhorse models used mostly for short and medium-range flights.

Last week, Fitch Ratings warned that debt backed by leases of planes now in Russia faced potential downgrades because of the risk that state-owned airlines might stop making payments "or ‘confiscate’ (i.e. theft) aircraft." Fitch said several lessors moved a few planes out of Russia and Ukraine before sanctions were announced.

Sanctions are also affecting the world’s two leading aircraft manufacturers, U.S.-based Boeing and Europe’s Airbus. According to JPMorgan, Boeing has 35 of its 737 Max and 777 cargo planes on order by Russian airlines, including 30 that were scheduled to be delivered this year, and Airbus has orders for 27 planes from Russian airlines, with seven expected to be delivered this year.