Ireland-based lessor SMBC Aviation Capital has posted a $168 million first-half pre-tax profit, up 7.5% on the prior year, and is preparing for a $1 billion capital boost over the coming weeks.
SMBC Aviation Capital CEO Peter Barrett said that the company delivered a “solid half-year performance” for the six-month period to Sept. 30, driven by the company’s core operating-lease business.
“This performance again proves the strength of our strategy which has been centred on managing the quality of a young, technologically advanced and fuel-efficient portfolio. This is coupled with our approach to risk management and the ongoing support of our shareholders, which will be further evidenced with the injection of new capital of $1 billion, expected in the coming weeks,” he said.
SMBC Aviation Capital is focused on liquid assets that are in high demand, so the majority of its portfolio is made up of Airbus A320s and Boeing 737s. Two years ago, only 2% of SMBC’s fleet was new-technology aircraft, like the Boeing MAX and the Airbus neo. Barrett said 30.6% of the portfolio has now been transitioned, up from 15% in the first half of 2017. By the middle of the next decade, the majority of the SMBC fleet will be new-technology aircraft.
Lease revenues for the period rose 3.5% to $490 million, delivering a $168 million pre-tax profit and 42.2% operating margin.
In the first half, the company placed 44 aircraft from its order book and raised $11.4 million profit from the sale of eight owned aircraft. SMBC also signed a contract to sell 29 from its managed fleet.
By the end of the period, SMBC’s aircraft assets totalled in excess of $11.2 billion, including 231 owned aircraft and pre-delivery payments.
SMBC has already placed all of the aircraft that it has scheduled for delivery in 2018 and 2019.