Dublin-based aircraft leasing company SMBC Aviation Capital has reported a sharp drop in pre-tax profits for the six months to the end of September due to the impact of Covid-19 on the aviation sector.
SMBC said its profit before tax came to $17.3m, down from $200m the same time last year with the company's performance reflecting the impact of lease restructurings and Chapter 11 airline bankruptcy protection processes.
It said this contributed to a $68m increase in provisions for credit losses and a $51m increase in asset impairment charges.
The company said its total aircraft operating lease assets grew by 9.5% to $11.5 billion reflecting increased sale and leaseback activity.
It completed $1.1 billion in sale and leaseback transactions relating to 22 aircraft with eight industry leading airline customers since the end of March.
SMBC also said that it has a strong pipeline of additional opportunities with another 19 planes equating to $1 billion. It also expects further opportunities as leading airlines seek to monetise assets and raise their liquidity.
Peter Barrett, CEO of SMBC Aviation Capital, said the company continued to see "market dislocation" due to Covid-19, which is having an adverse effect on the commercial aviation sector and has also impacted the company's profitability over the first half of its financial year.
But Peter Barrett said the company was 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," Mr Barrett said.
Peter Barrett said that as the company faces into the winter season, it expects 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," the CEO said.
"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," he added.