LONDON – Despite a tough start to the year, Irish leasing company AMBC Aviation Capital reports impressive financial results for the year 2021. 

SMBC reports strong financial performance where the leasing company report a profit before tax and exceptional items of $336,000,000 – compared to $15,200,000 in 2020 and $364,000,000 in 2019.

The trajectory for improvement is set to increase year on year as aviation exits the pandemic hiatus, nevertheless, headwinds still remain. Last year, there were $1,500,000,0000bn in leasing revenue and other ancillary revenue, this is an increase from $1,200,000,000bn in 2020. 

Goshawk 

The purchasing of Goshawk in May was valued at $6,500,000,000bn with options of shareholders’ recapitalisation to provide equity and debt capital. This transaction is expected to be done and dusted around the 4th Quarter of this year. Goshawk is also another Irish aircraft leasing company. 

Geopolitical strife

SMBC reported a net loss of $1,100,000,000 (billion) due to the one-off $1,600,000,000 (billion) impairment and the cancellation of leasing assets to Russian airlines, due to the Russian invasion of Ukraine. Aircraft that are owned and controlled by SMBC Aviation Capital is no more.

This is a full write-off of 34 aircraft based in Russia. Despite this, SMBC could still thrive elsewhere beyond Russian borders. 

Funding base

SMBC has a strong funding base totalling $12,300,000,000bn from shareholder support. Moreover, there is a 3rd party debt valuing at $1,470,000,000bn and bonds issuing worth up $1,000,000,000bn. The company has also received one of the world’s most prestigious finance rating firms Fitch and S&P ratings, with both giving SMBC an A rating. 

Increased sales book and a ‘recovering’ market

There is a huge increase in A320NEO and Boeing 737MAX logbooks with at least 41 aircraft ordered through SMBC. SMBC also attributes its increase in sales and profit due to the recovery of the aviation industry.

This could be seen by airlines and operators signing LOIs and contracts for new aircraft. In fact, 25 aircraft were inked and 23 jets were sold in the fiscal year of 2021 valuing them at $68,300,000 in profit. 

Peter Barrett, CEO, of SMBC Aviation Capital comments on the impressive company’s performance as he stated:

“These results demonstrate the strong upward trajectory of our business despite the considerable impact of the Russia-Ukraine war and Covid-19. While we are seeing ongoing challenges, the business is benefiting from a market recovery that continues to gather pace and a positive rebound in airline and investor demand for our portfolio of high-quality assets.”

“We are on track to close the Goshawk acquisition in Q4, which will reinforce our leading market position and give us further momentum and competitive advantage. Our shareholders are providing considerable support and the recapitalisation they are undertaking ensures we maintain our A- ratings with both S&P and Fitch.”

“The expanded SMBC Aviation Capital will be very well suited to the shape of the recovery that is taking place. Our continued balance sheet strength, combined with our ability to access diversified funding sources, enables us to continue developing our business in line with our disciplined strategy.”

“Following the Russian invasion of Ukraine earlier this year our thoughts and concerns are first and foremost with those in Ukraine and beyond who are impacted by this terrible conflict.”

“34 owned aircraft remain in Russia despite SMBC Aviation Capital terminating the leasing of these aircraft in line with international sanctions, which Russian airlines continue to fly within Russia and to countries from which repossession has not been possible.”

“It is unlikely that SMBC Aviation Capital will be able to recover the 34 owned aircraft within a reasonable timeframe, or at all. As a result, we have recognised a $1.6bn write-off in respect of the aircraft, representing a full impairment of the carrying value.”

“We have the benefit of significant insurance coverage and have every expectation that substantial recoveries will be secured.”