Dublin, 18 November 2020: SMBC Aviation Capital, one of the world’s leading aircraft leasing companies, today announces its results [1] for the half year ended 30 September 2020.
Financial Results – half year ended 30 September 2020
- Total aircraft operating lease assets grew by 9.5% (since H1 FY19) to $11.5 billion reflecting increased sale and leaseback activity
- Profit before tax of $17.3 million – compared to $200.0m in H1 FY19 with performance reflecting the impact of lease restructurings and Chapter 11 airline bankruptcy protection processes as a result of the impact of Covid-19. This contributed to a $68 million increase in provisions for credit losses and a $51 million increase in asset impairment charges
- Near term asset growth heavily weighted towards sale and leaseback transactions. Completed $1.1 billion in sale and leaseback transactions relating to 22 aircraft with 8 industry leading airline customers since March 31st 2020. Strong pipeline of additional opportunities with another 19 aircraft equating to $1 billion under LOI with expectation of further opportunities as leading airlines seek to monetise assets and raise liquidity
- Reduction of $3.9bn (65%) of original contracted capex in FY2020 and FY2021 to $2.1 billion due to OEM production delays and restructuring of OEM and sale and leaseback contracts
- Available liquidity of $5.2 billion from diversified funding sources with a 12 month sources to uses (excluding operating cash flows) of 2.3 times
- Continued strong strategic alignment and support from shareholders, SMBC and Sumitomo Corporation with $11.1 billion of support - comprising $2.9 billion of equity and $8.2 billion debt financing of which $3 billion was undrawn as at 30 September
- EBITDA for H1 2020 of $431 million, with EBITDA to interest coverage remaining strong at 2.8 times
- Average cost of debt of 3.23% compared to 3.68% for the 6 month period ending 30 September 2019 reflecting a combination of a lower interest rate environment and continued access to competitive funding.
Commenting on the company’s performance, Peter Barrett, CEO, SMBC Aviation Capital said:
“We have continued to see market dislocation due to Covid-19, which is having an adverse effect on the commercial aviation sector and has also impacted our profitability over the first half.
SMBC Aviation Capital’s ownership by supportive Japanese Financial Institutions puts us in a position not only to withstand the current operating environment but to take advantage of the attractive opportunities that are being presented. These opportunities include sale and leaseback opportunities with industry leading airlines that will deliver significant benefits to our current and future profitability and portfolio quality.
As we face into the winter season, we expect continued challenges across the sector. However, with the rollout of a vaccine combined with new travel measures, we are optimistic that through 2021, we will begin to see confidence restored in aviation and the fundamentals that have driven growth in previous years will begin to reassert themselves. We believe that such a scenario will result in strong demand for the new technology, fuel efficient, short haul, narrow body aircraft that are a foundation of our business model.”