Irish aircraft leasing firm SMBC takes €1.6bn hit on 34 jets stuck in Russia

Airlines continue to fly the aircraft within Russia and to countries from which repossession has not been possible

SMBC said it expects to make substantial recoveries from its insurance coverage. File Picture.

Dublin-headquartered SMBC said it has taken a $1.1bn (€1.09bn) net loss after terminating contracts of leasing aircraft to Russian airlines following the war in Ukraine.

One of the largest aircraft leasing firms in the world, SMBC said it has recorded an impairment of $1.6bn (€1.58bn) to cover the full financial impact of having 34 jets stuck in Russia after European Union sanctions forced the termination of all Russian leases.

"The aircraft are no longer under SMBC Aviation Capital’s control, resulting in the write-off of the full carrying value of the 34 owned aircraft remaining in Russia," the company stated in its full-year results published today.

SMBC, owned by a consortium including Japan's Sumitomo Corp and Sumitomo Mitsui Financial Group, said it expects to make substantial recoveries from its insurance coverage.

Despite the loss related to Russia, SMBC reported a strong underlying performance driving profit before tax and exceptional items of $336m (€332m), compared to $15.2m (€15m) in FY20 and $364.5m (€360m) in FY19, with continued momentum expected through coming financial year. 

“These results demonstrate the strong upward trajectory of our business despite the considerable impact of the Russia-Ukraine war and Covid-19," Peter Barrett, CEO, SMBC Aviation Capital said.

"While we are seeing ongoing challenges, the business is benefiting from a market recovery that continues to gather pace and a positive rebound in airline and investor demand for our portfolio of high-quality assets."

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