Hong Kong’s air­craft leas­ing push not a threat – SMBC chief Bar­rett

Irish Independent - Business Week - - FRONT PAGE - Donal O’Dono­van

THE rise of Hong Kong as an air­craft-leas­ing base is not a threat to Ire­land, ac­cord­ing to the head of Dublin-based SMBC Avi­a­tion Cap­i­tal, one of the big­gest air­craft lessors in the world.

Hong Kong’s gov­ern­ment has in­tro­duced a new regime which pro­vides at­trac­tive in­cen­tives for air­craft-leas­ing com­pa­nies to set up op­er­a­tions in the re­gion.

SMBC CEO Peter Bar­rett said that can com­ple­ment rather than threaten Ire­land’s sta­tus as a global air­craft-leas­ing hub.

He was speak­ing af­ter SMBC Avi­a­tion es­tab­lished its own op­er­at­ing com­pany in Hong Kong for the first time.

The growth of both Asian fi­nance and of China as a mar­ket is chang­ing the in­dus­try. That is a ma­jor fo­cus for ex­ec­u­tives from the sec­tor who are in Hong Kong this week for a con­fer­ence or­gan­ised by ‘Air­fi­nance Jour­nal’, where key­note speak­ers in­clude Ruth Kelly, CEO of Dublin-based Goshawk.

SMBC Avi­a­tion it­self is owned by one of Ja­pan’s big­gest banks, and a raft of Chi­nese in­vestors have taken sig­nif­i­cant stakes in other Ir­ish lessors in re­cent years.

The grow­ing im­por­tance of Hong Kong was not a threat to the Ir­ish in­dus­try, Peter Bar­rett said.

“It makes sense for us to have peo­ple on the ground there, but it suits us to be in both.”

Ire­land’s ad­van­tages in­clude a tax treaty net­work that cov­ers the bulk of coun­tries where air­craft are leased and a proven

Best of both worlds:

Peter Bar­rett said it suits SMBC to be in Hong Kong and Ire­land as the in­dus­try faces rapid changes track record in terms of peo­ple and fis­cal in­fras­tuc­ture, he said. “Our owner re­mains com­mit­ted to the busi­ness be­ing head­quar­tered in Ire­land,” Mr Bar­rett said.

De­spite a push from other ju­ris­dic­tions to at­tract and de­velop the sec­tor, Ire­land still stacks up well, he said.

SMBC Avi­a­tion Cap­i­tal is one of the big- gest air­craft lessors in the world.

Its lat­ests fi­nan­cial ac­counts, pub­lished in Au­gust, show its pre-tax profit edge 2.2pc higher to $319.3m (€280.8m) last year as the sec­tor con­tin­ued to ben­e­fit from strong de­mand from air­lines for jets.

Rev­enue fell 4.7pc to $1.03bn (€906m) in the 12 months to the end of March. That fig­ure in­cluded $962.6m in lease rev­enue.

The com­pany had $10.3bn (€9bn) in as­sets at the end of the fi­nan­cial year, along­side $7.2bn in bor­row­ings.

The ac­counts show that SMBC Avi­a­tion gen­er­ated 29.2pc of its lease rev­enue in Europe, 8.1pc in Asia, 18.5pc in emerg­ing Asian coun­tries, and 21pc in South Amer­ica.

An­other 11.9pc was de­rived from emerg­ing Euro­pean coun­tries, 6.8pc from North Amer­ica, and 4.5pc from the Mid­dle East and Africa.

In its 2015 fi­nan­cial year, SMBC placed or­ders for 110 Air­bus A320­neo jets and five A321ceo air­craft.

It also has or­ders placed for 90 Boe­ing 737 Max8 jets. In 2017 and 2018 the lessor sub­mit­ted or­ders for nine more air­craft.

It has 675 owned, man­aged and or­dered air­craft.

All of the air­craft SMBC is due to re­ceive by the end of March 2019 have al­ready been placed with cus­tomers.

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