Lessor SMBC Aviation Capital  has taken an $1.6 billion impairment on 34 of its aircraft that are still in Russia, it reported on July 8. This makes SMBC’s loss on Russia one of the largest of all lessors. SMBC takes $1.6 billion impairment on Russian fleet.

SMBC announced the impairment in its FY21 results, which closed on March 31. Five weeks after Russia invaded Ukraine in February and various countries imposed sanctions on Russia, the lessor had terminated contracts for all aircraft. Yet, it has been unsuccessful in repossing the 34 aircraft.

In a media statement, CEO Peter Barret says: “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.” By comparison: AerCap reported a $2.4 billion net charge in May.

The one-off impairment resulted in a $1.1 billion net loss for FY21. SMBC is happy with a strong underlying performance, which produced a profit before tax and exceptional items of $336 million compared to $15.2 million in FY20 and almost on par with $364.5 million reported in FY19. Lease revenues were $1.5 billion versus $1.2 billion in the previous year.

The lessor has seen strong demand for the Airbus A320neo family and Boeing MAX, resulting in the placement of 41 aircraft during the year. 

 

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Active as journalist since 1987, starting with regional newspaper Zwolse Courant. Grand Prix reporter in 1997 at Dutch monthly Formule 1, general reporter Lelystad/Flevoland at De Stentor/Dagblad Flevoland, from 2002 until June 2021 radio/tv reporter/presentor with Omroep Flevoland.
Since mid-2016 freelance aviation journalist, since June 2021 fully dedicated to aviation. Reporter/editor AirInsight since December 2018. Contributor to Airliner World, Piloot & Vliegtuig. Twitter: @rschuur_aero.

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