Ukraine's largest airline is still flying despite the war with Russia. Here's how.

• Ukrainian low-cost airline SkyUp has not stopped flying despite the war with Russia.
• The airline is surviving off of cargo flights and leasing contracts with foreign operators.

Ukraine's aviation sector came to a screeching halt when Russia invaded in February 2022, with Ukraine forced to indefinitely close its airspace and cancel all passenger service.

Even before the attack, aircraft lessors started repositioning their planes out of Ukraine and into places like Estonia, Spain, and France.

The empty skies and depleting fleets left the country's home airlines with few options, and many soon collapsed — including flag carrier Ukrainian International Airlines, which is currently crumbling under more than $500 million in debt, per Forbes.

But young budget airline SkyUp, which was founded in 2018 and already successfully weathered one tidal wave that was the coronovirus pandemic, managed to survive.

Famous for allowing its female flight attendants to ditch heels and skirts for pants and sneakers, SkyUp — and Ukraine's aviation market as a whole — was on the rise before the war started.

After launching in 2018 as a charter carrier, Skyup, as a scheduled passenger airline, carried more than 2.5 million people across some 16,000 flights in 2021.

It was right on the heels of veteran UIA's 2.8 million passengers the same year, making it one of the fastest-growing airlines in Europe. But when the war halted everything, SkyUp had to pivot its strategy.

CEO Dmytro Seroukhov told Business Insider that without the cash flow from selling passenger seats, SkyUp has turned its focus to cargo, charter, and so-called wet leasing contracts, where the airline leases its aircraft and crew to a customer.

SkyUp is banking on the lucrative aircraft-leasing market

While global airlines commonly own a large chunk of their fleet, many also wet-lease from airlines like SkyUp. In this case, that involves the Ukrainian carrier supplying aircraft, crews, maintenance, and insurance, or ACMI for short, to foreign operators.

Seroukhov told BI that the ACMI market was new to SkyUp and that it had to adjust quickly as wartime set in. The carrier has since established agreements with close to 20 different airlines, like Air Albania, Air Moldova, and Hungary's Wizz Air.

The ACMI business was able to quickly kick off because nearly all of SkyUp's planes had been evacuated from Ukraine ahead of time, giving it room to shift its operations.

"We had alarms from insurance companies and other partners that something should happen. We didn't know when or exactly what, but we needed to be prepared where possible," Seroukhov told BI. "So, we re-built our schedule and re-based our aircraft outside of Ukraine."

Meanwhile, one of its planes got left behind and was eventually rescued from the war-torn country in April 2023, which Seroukhov said took approximately 1,000 people to accomplish.

With its once-stranded plane back in operation, SkyUp now has a 10-strong fleet of Boeing 737 aircraft to power its ACMI business, Seroukhov said.

In the seven months between April 1 and November 1 of this year, SkyUp's ACMI business carried more than 1 million passengers across 43 countries and 440 different routes. And it was among the 20 largest ACMI providers in Europe for June 2023, according to SkyUp.

The CEO stressed the importance of continued partnerships to ensure SkyUp's employees — who Seroukhov said stretch from Canada to Australia, but are primarily located in Ukraine — continue to have jobs.

"If our team continues to work they may have a salary, and if they have a salary, they can support themselves and their families," he said. "It is key not just the operations, but support for our people, and, in parallel, the support of Ukraine."

SkyUp is looking for a future in Malta and North America

With its survival hinging on continued ACMI and charter contracts, SkyUp has since secured operating certificates in the US and Canada as it looks to expand into the lucrative North American market. "We are in negotiations with several possible partners," Seroukhov said.

The airline does not plan to stop there. Earlier this year, SkyUp received permission to operate as an official EU carrier based in Malta.

The airline has since set up a subsidiary called SkyUp Malta and offers leasing contracts, but plans to also launch charter services and passenger flights to leisure destinations starting in 2024.

With the war with Russia still raging, SkyUp will have further challenges to face, including getting more aircraft and expanding its operating licenses to more nations.

But Seroukhov said the company's strong culture and the resiliency of its people will get it not only through the conflict but also allow it to one day return to Ukraine.

"When the war is finished, and Ukraine wins, SkyUp will restart with absolutely new intentions," he told BI. "Before, the intention was to open Ukraine to the world and open the world for Ukrainians. Tomorrow, the idea will be to connect, and to bring home a lot of Ukrainians."