European sanctions have forced Aeroflot to ground its new low-cost subsidiary Dobrolet, Russia's national carrier said on Sunday in the most direct fallout yet of the EU's punitive measures against Russia over the Ukraine crisis.
Dobrolet will temporarily suspend all flights from Monday after European counterparties annulled aircraft insurance agreements, stopped providing aeronautical information and have refused to fulfil leasing, repair and maintenance agreements, Aeroflot said.
The move comes less than a week after Brussels added Dobrolet to its list that EU persons and entities are prohibited from doing business with.
The EU said on July 30 that as a subsidiary of a Russian state-owned airline, Dobrolet had exclusively operated flights between Moscow and Simferopol since Russia's annexation of Crimea. "It therefore facilitates the integration of the illegally annexed Autonomous Republic of Crimea into the Russian Federation and undermines Ukrainian sovereignty and territorial integrity," the EU said.
The Russian government, business leaders and economists have during the past two weeks focused on the introduction of broader sanctions against Russia by both the US and the EU.
Those measures, which prohibit a number of Russian banks and energy companies to sell new bonds or equity with a maturity longer than 90 days in either US or European capital markets, are expected to have a bigger affect on the Russian economy in the longer term than the targeted measures with which the sanctions started.