Dublin-based aircraft lender SMBC Aviation Capital has amortized $ 1.6 billion worth of jets trapped in Russia after the Russian government seized assets after the invasion of Ukraine.
SMBC announced its full-year results yesterday, stating that 34 aircraft have been left behind in Russia. With an impairment of $ 1.6 billion, lenders suffered a loss of $ 1.1 billion in the year ended in March.
However, with the resurgence of airline activity, SMBC said pre-tax profit and exceptional commodities surged from $ 15.2 million to $ 336 million, helping to achieve strong foundational performance during this period. I am saying. Its lease income and other operating income increased to $ 1.5 billion annually, compared to $ 1.2 billion in fiscal year 2020.
SMBC has more than 730 owned, managed and ordered aircraft.
Recently, we signed an agreement to acquire Goshawk, a leasing company based in rival Dublin. This solidifies SMBC’s position as one of the world’s largest aircraft leasing companies. The acquisition, with a corporate value of $ 6.5 billion, is expected to close in the final quarter.
SMBC CEO Peter Barrett said 34 of his aircraft, “despite SMBC Aviation Capital ending the lease of these aircraft in line with international sanctions,” after Russia invaded Ukraine. Confirmed that remains in Russia.
He said Russian airlines continue to fly jets within Russia and to countries where ownership could not be regained.
“It is unlikely that SMBC Aviation Capital will be able to recover 34 owned aircraft in a reasonable time or at all,” Barrett said.
“As a result, we recognized a $ 1.6 billion amortization of aircraft, which represents a complete impairment of book value,” he added.
“We have the advantage of having a fair amount of insurance and expect a substantial recovery.”
SMBC is owned by a consortium of Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Finance Lease, and Sumitomo Corporation in Japan.
Barrett added that despite the effects of the war in Ukraine and the Covid pandemic, the basic performance of the business in last fiscal year shows a “strong uptrend” for SMBC Aviation Capital. ..
“We face ongoing challenges, but businesses benefit from a fast-paced market recovery and a positive recovery in airline and investor demand for a portfolio of high-quality assets. “He said.
Barrett said the acquisition of Goshawk “strengthens market-leading position and provides additional momentum and competitive advantage” for SMBC.
“Our shareholders are providing a fair amount of support and the capital buildup they are making will allow us to maintain an A rating in both S & P and Fitch,” he said.
“Extended SMBC Aviation Capital is very well suited to the form of recovery that is happening.”