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. Last Updated: 07/27/2016

Aeroflot Completes $350M Deal For Boeings

Russia's Aeroflot air carrier has completed a $350 million deal in loans to upgrade its outdated fleet, Chase Manhattan Bank announced Tuesday. Aeroflot will use the loan to acquire 10 Boeing 737 airplanes for routes on several key European routes, according to the announcement from Chase Manhattan, a major backer of the agreement.

Several other international banks joined Chase Manhattan in the deal, including Banque Nationale de Paris, The Sumitomo Bank Limited and Westdeutsche Landesbank, Interfax said.

The U.S. Export-Import Bank is providing a long-term guarantee to Aeroflot for the $334 million loan from Chase Manhattan.

Aeroflot got the green light last month on the Boeing deal after the Russian government waived customs duties on foreign-made planes.

"The deal would be profitable for Aeroflot only if the Russian government excuses the company from paying customs duties on the imported aircraft," MFK Renaissance said in a research note last week.

The July 7 decree permits Aeroflot to fly foreign-built aircraft without paying 30 percent customs tariffs for five years.

The Boeing 737-400 purchases, first announced last fall, has drawn angry reactions from Russian aircraft makers. The Russian government says it intends to protect the domestic aviation industry by requiring Russian airlines to buy homemade planes at the same time they purchase foreign ones.

The Russian airline signed a $1 billion deal last week to lease 20 Ilyushin-96 jets with U.S.-built engines and electrical equipment. Russia's National Reserve Bank is backing the deal by helping create a leasing firm that will buy the 20 passenger and cargo plans from the manufacturers for $13.7 million to $14.5 million each. The planes then will be leased to Aeroflot.