SMBC Aviation Capital Annual Report 2020
Dublin based SMBC Aviation earned revenue of US$1.2 bn, up 10%, and profit before tax of $364.5m, up 6% according to its 2020 Annual Report. It sold 30 aircraft, realising gains of $33.6m. The average age of the aircraft was 8.6 years. It finished the year with a very strong balance sheet and liquidity base. At year end, net leverage was 2.66x and 100% of assets were unencumbered. It had available liquidity of $6.3bn.
Post year-end, it has agreed with many of its lessees to defer upcoming rent obligations. In general, the deferred rentals are due to be discharged in the current financial year. Staff costs were $80.4m for an average number of 192. Key management personnel include directors (executive and non-executive), members of the Executive Committee and the Company Secretary. The compensation paid or payable to key management was $20.6m of which about half was salaries and other short-term benefits.
The Group has 85 airline customers in 37 countries. The Group’s fleet consists of 713 owned, managed and committed aircraft. It is the Group and Company’s practice to hold aircraft for an average period of 5 years. Average age of the portfolio is 4.1 years and 46% are of the newest technology. SMBC is engaging with manufacturers on how it sees the demand for new aircraft evolving in this environment, and recently agreed commercial terms with Boeing to defer 68 of its 116 Boeing MAX commitments. These aircraft were scheduled for delivery prior to December 2022 and have now been deferred to 2025-2027.
The Group and Company is a member of the Japanese consortium of Sumitomo Mitsui Financial Group (“SMFG”) and Sumitomo Corporation (“SC”) (the “Consortium”). The Group’s financial strength is also reflected in the Group and Company’s credit rating of A- from both Fitch Ratings and Standard & Poor’s, the highest rating in the aircraft leasing industry for a dedicated aircraft lessor, positioning the business well to execute on its growth plans in the coming years.
In 2019, SMBC contributed almost €500,000 to 18 Corporate Social Responsibility (CSR) projects in Ireland, the US, Malawi and Singapore. It supports a core legacy project, Belvedere Youth Club, alongside four foundation projects: SUAS; The Trinity Centre for People with Intellectual Disabilities (TCPID); Laura Lynn Children’s Hospice; and Open Arms Malawi.
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