Saturday 21 October 2017

SMBC sets sights on becoming top lessor

Peter Barrett, SMBC Aviation Capital CEO. Photo: David Conachy
Peter Barrett, SMBC Aviation Capital CEO. Photo: David Conachy
John Mulligan

John Mulligan

The chief executive of Dublin-based aircraft leasing firm SMBC Aviation Capital, Peter Barrett, has told investors that the company aims to become the world's leading jet lessor.

The company, with owned aircraft assets worth $10bn (€8.5bn), is currently ranked fourth in the world by aircraft portfolio size, after GECAS, AerCap and Avolon.

Avolon, co-founded by Domhnal Slattery, overtook SMBC earlier this year when it completed the $10bn acquisition of the leasing business of CIT.

SMBC's latest annual report also shows that unspecified key executives at the company shared more than $20m (€17m) in pay, as well as short and long-term benefits during the last financial year.

The figure was down from almost $29m a year earlier.

SMBC generated revenue of $1.16bn (€982m) in the 12 months to the end of March this year, and a pre-tax profit of $346m (€293m). The figures were 11pc and 48pc higher respectively on the previous financial year.

"Increasing passenger numbers, especially in the emerging markets of Asia and South America, have resulted in strong underlying demand for new aircraft from our order book, which is placed with new and existing customers into 2019 and beyond," said Mr Barrett in the annual report. He added that demand for air travel has doubled every 15 years and that the trend is expected to continue. SMBC has a fleet of 670 owned, managed and on-order aircraft.

"We have been the lessor of choice in a number of sale and leaseback transactions and have built new customer relationships with airlines such as SAS, West Air and, since year-end, Philippine Airlines," said Mr Barrett.

"We believe we that we have the strongest focus on risk management in the aircraft leasing industry, which has been a key factor in our strong performance," he told investors.

He also pointed out that during the last financial year, SMBC had benefited from a "strong appetite" from investors for used aircraft.

SMBC sold 35 jets from its portfolio in the period, with an average age of 9.8 years.

It sold six aircraft from its managed portfolio, making for one of the strongest trading years in SMBC's history.

SMBC Aviation Capital is owned by a consortium of Japan's Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Finance and Leasing, and Sumitomo Corporation.

Its annual report does not break out how much its senior executives earned during the year. Non-executive staff, who numbered about 162 at the year-end, were paid a total of $64.7m (€54.7m) last year.

Irish Independent

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