Aircraft lessor SMBC Aviation Capital’s profits soared to $1.2 billion (€1.06 billion) in the 12 months to March 31st as it settled lawsuits with insurers over planes lost to Russia.
Excluding those deals, the Irish company said on Thursday that its main business, buying planes and leasing them to global airlines, grew pretax profits 22 per cent to a record $563 million over the same period.
Dublin-headquartered SMBC earned $2 billion in rent from its leased aircraft during its last financial year, which ended on March 31st, $59 million more than during the previous 12 months, the company reported.
Settlements of lawsuits against insurers over aircraft lost following Russia’s invasion of Ukraine came to $654 million, further boosting the company’s headline profit.
Those deals, for $630 million last year and $24 million recently, mean SMBC has recovered $1.41 billion of the $1.61 billion that the company calculated it had lost as a consequence of Russia’s invasion of Ukraine in February 2022.
It agreed a $756 million settlement in its 2023 financial year, with Russian business, Insurance Company NSK, specifically on insurance and reinsurance policies covering jets leased Aeroflot, Russia’s largest airline.
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SMBC is continuing with further litigation against insurers in the UK, alongside other companies in its industry.
The company terminated leases with Russian airlines following the invasion of Ukraine to comply with sanctions, leading to the loss of 34 aircraft.
SMBC was one of several lessors, including Irish rivals AerCap and Avolon, who lost commercial jets as a result of the war and sanctions.
These businesses have all recovered large sums of cash following litigation sparked by many insurers’ refusal to pay out.
Peter Barrett, SMBC chief executive, said its results showed the underlying strength of its business.
He added that airlines continued to “turn to SMBC Aviation Capital in even greater numbers”, positioning it to grow profits further.
Aisling Kenny, chief financial officer, said the company continued to cash in on positive demand, signing $4 billion in new long-term agreements to lease aircraft to airlines.
She noted that SMBC took advantage of a “robust aircraft trading market” and got further cash settlements of its Russian insurance litigation.
The company’s figures show that its fleet came to 510 aircraft at the end of March this year.
SMBC completed 196 transactions during its last financial year, to buy, lease or sell aircraft, the company noted.
Manufacturers delivered $3.3 billion worth of planes to the Irish company during the year.
SMBC buys aircraft from manufacturers Airbus and Boeing and leases them to airlines worldwide.
Its shareholders are Japan’s Sumitomo Mitsui Financial Group and Sumitomo Corporation.
The company is one of the top three aircraft lessors in the world and one of several leading players in its industry based in the Republic.
A report published this week by aviation industry investor, Irelandia, stated that Irish-based lessors control 37 per cent of all commercial aircraft currently flying in the world.
Global demand for commercial jets continues to grow.
