Business Irish

Tuesday 12 December 2017

SMBC boss 'comfortable' with position despite competition

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

John Mulligan

A RAFT of new Chinese aircraft lessors muscling in on the global market shouldn't have any negative consequences for the sector, according to Peter Barrett, the chief executive of one of the world's biggest jet leasing firms, Dublin-based SMBC Aviation Capital.

There are more than 50 Chinese aircraft-leasing firms now chasing business and expertise as the government there supports the sector.

Among the players is Avolon, the Dublin firm co-founded by Domhnal Slattery which was bought last year by Chinese conglomerate HNA's Bohai Leasing.

"It has always been a pretty competitive market," said Mr Barrett.

"What you've seen in the last few years, as aircraft leasing becomes more mainstream and people recognise the attraction of the sector, with stable returns, real mobile assets and cashflow from leases, is that people are attracted to that.

"We're seeing a lot of new entrants over the last few years, including from China," he said.

"We've been in business 17 years. Some entrants do very well, get very well established and are long-term players, and some of them less so."

Airbus has recently predicted that as many as 35,000 new aircraft will be needed worldwide over the next 20 years to fill growing demand for air travel and for re-fleeting.

"There are a lot of aircraft to be delivered and a lot to be financed over the next number of years," said Mr Barrett.

"There is demand. We're comfortable with our position. We're financially very strong, we've a strong shareholder base, strong funding capability and a very high-quality portfolio. It's clearly a cyclical industry and there are the usual macro-economic challenges."

Mr Barrett said SMBC, whose customers include Aer Lingus and Ryanair in Ireland, has no exposure to Qatar, and very little exposure generally in the Gulf.

Qatar has been cut-off from neighbours including Saudi Arabia and the United Arab Emirates in a political row.

SMBC Aviation Capital yesterday reported that its pre-tax profits rose 48pc to $346m (€308m) in the 12 months to the end of March. Its revenue was 11pc higher at $1.16bn (€1.03bn). Demand in Asia spurred growth.

Mr Barrett added that SMBC Aviation Capital will tap the bond market again "when the time is right". The company issued an inaugural, $500m bond last year.

Irish Independent

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