Profits tumble 15% at engine leasing firm

Pre-tax profits at a Shannon-based aircraft engine leasing firm, Shannon Engine Support last year decreased by 15% to $38.8m (€36m).

Newly filed accounts also show that the company’s revenues declined by 22% to $81.22m According to the directors’ report section of the accounts “overall turnover decreased by 22% primarily driven by tight market conditions impacting the utilisation of the portfolio.

Activity pertaining to aircraft engine leasing decreased by 22%.”

The directors stated that the firm’s pre-tax profit represents a margin of 48% on its revenues which is above the previous year. Last year’s pre-tax profit includes an exceptional gain of €10.39m arising from the sale of fixed assets.

The firm employs 26 and they last year shared a pay pot - including pensions - of $4.3m or on average $167,000 each.

The breakdown of the numbers employed show that 10 are customer support; six are in marketing, five in financial and five in administration.

Directors’ pay, including pension payments, last year totalled $553,764.

Shannon Engine Support is a 50/50 venture between General Electric and the French-based Safran.

Regarding the profit decline, the directors maintain that they “are confident through engine utilisation and margin monitoring that profitability will improve in the future”.

They added that “turnover for future years will depend on utilisation and lease rates. Utilisation will be determined by airline demand for spare engine capacity.”

The figures show the largest drop in business for the firm was in the Asia-Pacific region, where revenues last year decreased by 41% going from $40.26m to $23.8m.

The firm also sustained decreases in business in Europe, with revenue going from $34.36m to $31.2m and the Americas, where revenue dropped from $10.5m to $8.7m.

In the ‘Rest of World’ category, revenue dipped from $19.35m to $17.33m. The profit last year takes account of hefty non-cash depreciation charges of $32.97m.

The firm paid corporation tax of $21m on its profits resulting in a post-tax profit of $21m.

At year end, the business had accumulated profits of $526m with ‘other reserves’ valued at $308.5m.

Currently, there are 3,000 aircraft valued at €83bn leased out of Ireland with the total annual tax contribution to the Exchequer from the sector amounting to over €300m.