Avatar

$ 1.6 billion in losses for the rental company



Reading time: 2 minutes

SMBC Aviation Capital depreciates $ 1.6 billion in assets to cover the financial impact of the blockade of 34 planes in Russia after European Union sanctions forced the termination of all leases in the country. , reports Reuters.

SMBC, headquartered in Ireland, which is owned by a consortium that includes Japan’s Sumitomo Corp. and Sumitomo Mitsui Financial Group, said it expects to make substantial recoveries from its insurance coverage.

Landlords and insurers are preparing for a historic battle for possible record damage worth about $ 10 billion.

SMBC is the latest landlord to receive an immediate blow, after more than 400 leased planes were stranded in Russia following Moscow’s February 24 invasion of Ukraine.

The SMBC said it had canceled the full carrying amount of the remaining aircraft in Russia after finding that it was unlikely to recover the aircraft within a reasonable time.

Russian airlines continue to fly aircraft in Russia and in countries where repossession has not been possible, the company added.

The downward revision of assets pushed SMBC into a net loss of $ 1.1 billion in its financial year ended in late March.

Excluding the negative revaluation of assets, the company achieved a basic operating profit of $ 336 million, close to the pre-pandemic level of $ 365 million, recorded in 2019.

SMBC CEO Peter Barrett said that while there are ongoing problems for the industry, the market recovery continues to accelerate.

The Dublin-based company said it had seen increased demand for single-deck Airbus A320neo and Boeing 737 MAX aircraft, with 41 aircraft placed on the order book.

The company also noted a rapid recovery in the sales market, selling 23 aircraft in the 12 months ended late March for a profit of $ 68.3 million.

SMBC says it expects its $ 6.7 billion acquisition of smaller competitor Goshawk Aviation, which will make it the world’s second-largest aircraft lessor by number of aircraft, to be completed in the fourth fiscal quarter. .