SMBC shareholders pump $1bn into company for new aircraft

Japanese owners to provide Irish company with new funds by end of March 2019

SMBC chief executive Peter Barrett said the capital contribution was further evidence of shareholder support for the Irish company. Photograph: Brenda Fitzsimons

SMBC chief executive Peter Barrett said the capital contribution was further evidence of shareholder support for the Irish company. Photograph: Brenda Fitzsimons

 

Irish aircraft leasing specialist SMBC Aviation Capital’s shareholders plan to pump $1 billion (€863 million) into the Dublin-based company, which has ordered 200 aircraft from manufacturers Airbus and Boeing.

SMBC said on Monday that its backers, Japan’s Sumitomo Mitsui Financial Group and Sumitomo Corporation, have agreed to provide the Irish company with $1 billion by the end of March 2019.

The company intends to use the cash to pay for new aircraft that it is planning to buy from next year, to fund its continued growth and offer airline customers finance to acquire aircraft.

SMBC confirmed that it now has 110 A320 craft on order from European manufacturer Airbus, and 90 737 Max 8s on order from US giant Boeing.

The orders are valued at about $20 billion and the aircraft are due to be delivered between now and 2022.

The company buys aircraft from manufacturers such as Boeing and Airbus and leases them to airlines in Europe, the Americas and Asia.

During the past year it provided South Korean carrier Asiana’s first Airbus A350XWB.

Other customers include Avianca in Colombia, Air Europa in Spain and Scandinavian airline SAS, which has been renewing its fleet via the Irish company.

Operating profits in SMBC’s last financial year, which ended on March 31st, were $661 million. The company is due to publish results for the six months to the end of September shortly.

Sumitomo, the Japanese banking and financial services group, bought the Irish business in 2012.

Its leasing arm, Sumitomo Mitsui Finance and Leasing Company, will take a 50 per cent stake in the Irish aviation business by the end of next March.

The change in shareholders will make no difference to SMBC’s day-to-day operations. Sumitomo Mitsui Financial Group and Sumitomo Corporation will remain as the ultimate parents.

SMBC chief executive Peter Barrett said the capital contribution was further evidence of shareholder support for the Irish company.

“This capital ensures that we are well positioned to deliver on our own growth plans by enabling us to offer our customers innovative aircraft financial solutions,” he said.

Sumitomo Mitsui Finance and Leasing Company president Masaki Tachibana confirmed that the capital injection demonstrated the Japanese group’s confidence in SMBC’s strategy.

The change in shareholding is due to take effect from March 31st, but is subject to approval by Japanese and other authorities.

SMBC owned and managed 670 aircraft worth a total of €10 billion by the end of last March. It did 111 deals during its last financial year.

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