Asian aircraft lessors' Russia losses top $1b, led by SMBC Aviation

Asian aircraft lessors' losses in Russia have risen to nearly $1.2b after Japan's SMBC Aviation Capital, the player with the biggest exposure to the sanctions-hit country, reported the industry's latest financial damage from the Ukraine war. SMBC Aviation's parent, Sumitomo Mitsui Finance and Leasing (SMFL), on Friday announced an 81.96b yen ($635m) Russia-related extraordinary loss for the financial year ended in March. An SMFL spokesperson said the group had 36 aircraft leased to Russian airlines at the time of the Ukraine invasion. Among the 35 it owns, only one was able to be retrieved. The group has written off the value of 34 aircraft still stranded in the country, after taking the pre-received deposits. Despite the losses, SMFL, a joint venture of Sumitomo Mitsui Financial Group and Sumitomo Corp., reported a net profit of 35.36b yen, 5% more than the year before. Revenue grew 26% on the year to 1.81t yen, as domestic leasing demand gradually recovered from the COVID-19 pandemic. Aircraft lessors around the world have been hurt by European Union sanctions requiring the termination of all leases with Russian companies by March 28. While the EU sanctions only apply to companies operating in the bloc's member states, many Asian leasing companies base their operations in Ireland for tax reasons. In response to the sanctions, Russia has moved to allow its airlines to hold on to their leased planes and re-register them locally. SMBC Aviation is not alone. Avolon Holdings, co-owned by China's Bohai Leasing and Japan's Orix, last week reported an impairment of $304m for 10 of its aircraft grounded in Russia. For Avolon, the January-March quarter resulted in a net loss of $182m, more than twice the year-earlier loss. Story has more detail.<br/>