(Reuters) – The major aircraft rental company Avolon recorded a write-down of $ 304 million in the first quarter to cover the full economic impact of having 10 jets still stuck in Russia following EU sanctions that forced all Russian leases.
Ireland’s Avolon said on Tuesday that it had reduced the carrying value of the jet to zero after taking back four aircraft so far. It also struck an optimistic tone for the outlook for the sector as air travel was largely resumed after a series of covid-19 deadlocks.
“While we continue to make every effort to recover these assets, we recognize the full write – down this quarter, which puts the economic impact of Russian sanctions behind us,”; CEO Dómhnal Slattery said in a statement.
More than 400 leased aircraft worth almost $ 10 billion remained in Russia after a deadline of March 28 to terminate contracts in line with Western sanctions against the war in Ukraine, leaving the landlord facing major potential write-downs or a long insurance battle.
Avolon reported a net loss of $ 182 million for the quarter but said adjusted net profit of $ 80 million, excluding Russia’s impact, was its strongest underlying quarterly result since the covid-19 pandemic began.
Slattery said the improved performance was largely driven by the rapid reopening of Asia’s borders and increased global aviation, resulting in higher cash collection levels. Avolon owned and managed a fleet of 592 aircraft at the end of March.
“This achievement reaffirms the inherent strengths of our business and the absolute resilience of the aircraft leasing model, giving us confidence in the outlook for the rest of the year,” said Slattery.