Dublin baded Japanese aircraft leasing company SMBC Aviation Capital announced today it has booked a further US$654 million in proceeds from insurance settlements over the past year related to jets stranded in Russia following Western sanctions.
The latest addition has increased the SMBC's total recoveries from insurance claims following the Western sanctions over Moscow's war in Ukraine to $1.41 billion.
The Japanese Leasing company was among the six lessors that ended an Irish lawsuit against their insurers last month following a series of settlements.
SMBC has recorded an impairment of $1.6 billion in 2022 to cover the full financial impact of having 34 Planes stuck in Russia after the sanctions forced the termination of all Russian leases.
Couple of months ago, Japan's Sumitomo Mitsui Financial Group (SMFG) had announced that its subsidiary SMBC Aviation Capital Limited has received an insurance settlement of US$445 million, subject to approval by the Irish courts. The proceeds were part of a settlement with some insurance companies.
In October 2023, SMBC Aviation Capital had announced that it had received cash insurance settlement proceeds totalling approximately US$710 million in respect of its sixteen (16) aircraft and associated engines, previously leased to Aeroflot.
In the fiscal year 2022, SMBC Aviation Capital had terminated all lease contracts with Russian airlines. This came after sanctions were imposed on Russia by the European Union, the United States, the United Kingdom, and other countries due to Russia’s invasion of Ukraine.
The aircraft lessor gave the update in its full year results to the end of March, which showed pretax profits rose 22% year-on-year to a company record $563m, excluding the benefit of the insurance settlements.
It said today its core lease rental revenue grew by 3% to $2 billion and its asset sales hit $1.9 billion following the sale of 48 older aircraft.
Meanwhile, Boeing and Airbus are making progress in stabilising production but stability is far away, the head of aircraft leasing giant SMBC Aviation Capital said today.
"I was actually there (at Boeing) a few weeks ago. I certainly felt that the corner was turned and I don't say that lightly. There's more to go but I do think they are absolutely travelling in the right direction," Peter Barrett told Reuters.
"Airbus also has made progress," he added.
Aisling Kenny, CFO of SMBC Aviation Capital, commented:
“During the year we continued to capitalise on positive demand dynamics and capture opportunities, integrating increasingly higher yielding aircraft into our fleet and signing $4 billion of new leasing agreements. At the same time, we took advantage of the robust aircraft trading market while also achieving further cash settlements in our Russian insurance litigation.
This success is the direct result of our long-term strategy to build a leading, in-demand portfolio of scale, underpinned by our disciplined approach to investment and portfolio management, coupled with significant balance sheet strength.”
Due to western sanctions on Russia, an approx. $12 billion worth of leased jets need to be retured to Lessors like "Ireland-based SMBC Aviation Capital" and "Singapore-based BOC Aviation" and "AerCap".
