Owned by a consortium which includes Japan’s Sumitomo Corp and Sumitomo Mitsui Financial Group, Ireland based aircraft lessor SMBC Aviation Capital (SMBC) has recorded a US$3.6 billion impairment over 34 jets that became stranded in Russia after sanctions were put in place following the country’s invasion of Ukraine that basically saw all leases terminated.
According to Reuters news agency, over 400 planes were left stranded in Russia after sanctions took effect. SMBC confirmed that the write-off was based on full carrying value as the planes could not be recovered within a reasonable period of time. The lessor anticipates making significant financial recoveries through its insurance coverage. Currently Russia is still flying the planes either on domestic routes or to airports where enforced recovery would not be possible.
Excluding the sum written off, rather than making a loss of US$1.1 billion the lessor would have posted a US$336 million profit, almost at the same level as pre-pandemic 2019 when the company recorded a profit of US$365 million. SMBC remains optimistic with the current state of the market, having sold 23 aircraft in the year ending March 2022, making a US$68.3 million profit, while having also placed a combination of 41 Airbus A320neo and Boeing 737 MAX single-aisle jets from its order book. SMBC has also confirmed it anticipates its US$6.7 billion acquisition of Goshawk Aviation in the final quarter of the year. (£1.00 = US$1.20 at time of publication).
