Profits fall at O’Brien-owned firm

AN AIRCRAFT leasing company owned by Denis O’Brien saw profits fall by close to a third last year.

Accounts just filed at the Companies Registration Office show Aergo Capital’s profits dropped from $3.6 million (€3m) to $2.49m (€2.1m).

In a note to the accounts, the Dublin-based company’s directors said they were “pleased with the level of business and year-end financial position, in what continues to be a difficult period for the airline industry”.

“Lease rates and current market values for aircraft remain depressed, but the company has been successful in keeping its aircraft on lease and the directors expect that lease rates will improve from current levels.”

Aergo’s annual depreciation charge on its aircraft, which totalled $22m (€18.6m), increased by $7.2m (€6m).

Turnover for the year ending December 31, 2004, increased $3.8m (€3.2m) to $37.7m (€31.9m).

The number of aircraft in Aergo’s fleet increased by three to 28. It said this reduced its exposure to the company’s main client, Italian flag carrier Alitalia, to just over half its total fleet.

About 30% of shareholders’ funds are being used as security for borrowings and if the company was not able to make its repayments, these would fall into the hands of its lenders.

Aergo is keeping a close eye on the restructuring of struggling Alitalia because it needs the carrier to maintain the lease payments.

Aircraft leasing to European airlines accounts for $26m (€22m) of the group’s turnover, though its business in Asia, Africa and the Middle East is growing.

Even with the decline in profits, shareholders were paid $1m (€846,000) in dividends, the bulk of which goes to Mr O’Brien.

The accounts show the company’s 28 aircraft were worth $141m (€119m) at the end of 2004.

Aergo was set up by Mr O’Brien, who was a senior executive at Tony Ryan’s GPA aircraft leasing company, in 1999.

Mr O’Brien, who netted €250m from the sale of his stake in Esat nearly six years ago, is also chairman of the Caribbean mobile phone operator Digicel and he controls a number of radio stations in Ireland and Eastern Europe. He is also deputy governor of the Bank of Ireland.