Aircraft lessor SMBC Aviation Capital books profit of €318m

Air travel’s recovery is showing no signs of slowing, according to aircraft lessor SMBC Aviation Capital, which earned €318 million profit in the 12 months to March 31st.

Dublin-based SMBC buys planes from manufacturers such as Airbus and Boeing, then leases them to airlines around the world.

SMBC said on Thursday that it earned pretax profit of $341 million (€318 million) in its last financial year, which ended on March 31st.

Post-Covid recovery

Peter Barrett, SMBC Aviation Capital’s chief executive, said the company had further strengthened its position over the last year, positioning it to take advantage of aviation’s post-Covid recovery.

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“With consumers continuing to prioritise spending on air travel … the global airline sector is firmly on track to return to profitability in 2023,” he added.

Mr Barrett noted that passenger traffic in many regions had “powered ahead” of levels reached in 2019, the year before Covid-19 restrictions hit air travel.

SMBC completed a deal to buy rival Goshawk during the year. The purchase, which included Goshawk’s leasing business, assets and liabilities, was valued at $6.7 billion.

The purchase left SMBC with almost 900 owned, managed or committed aircraft, making it the second-biggest aviation lessor in the world by fleet size.

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SMBC’s pretax profit in its last financial year was slightly in advance of the $336 million underlying surplus it reported for the 12 months ended March 31st, 2022.

Mr Barrett called the purchase a milestone that had accelerated the company’s growth and cemented its position as a market leader.

“The benefits of the acquisition will become increasingly apparent in the coming periods,” he predicted.

Ukraine war

That underlying profit excluded a $1.1 billion loss stemming from the termination of agreements covering the lease of 34 aircraft to Russian airlines to comply with EU sanctions imposed following the country’s invasion of Ukraine in February 2022.

The carriers did not return the planes, forcing the company to write off their value. SMBC is one of several Irish aircraft lessors that took legal action against insurers last year to recover losses as a consequence of the Ukraine conflict.

Japan’s Sumitomo Mitsui Financial Group and Sumitomo Corporation owns SMBC. This week the company announced that Noriyuki (Nori) Hiruta would succeed Tom Tanaka as its chairman.

Mr Noriyuki previously served as general manager of the lease and business development department at Sumitomo Corporation.