Dubai's DAE records 2022 loss on Russian write-offs

The plane lessor's cash flow from operating activities, however, increased 12 per cent on an annual basis to $1.28 billion

About half of its DAE's owned portfolio comprises fuel-efficient, next-generation aircraft. Photo: DAE Capital

Dubai Aerospace Enterprise, one of the world's biggest plane lessors, reported a full-year 2022 loss after it wrote off $538 million for its exposure to Russian aviation operators.

DAE’s loss for the 12 months to the end of December was more than $279 million, compared to a profit of $150 million reported at the end of 2021, the company said in a statement on Wednesday.

The plane lessor’s profit before the exceptional items write-off, however, increased 37 per cent on the year to $258.6 million.

Its full-year financial performance is adjusted to exclude the impact of the loss of control of 19 aircraft which were leased to airlines based in Russia. In compliance with applicable sanctions, DAE terminated the lease agreements after Russia invaded Ukraine in February last year, it said.

In November, DAE said it “has no way” to determine whether the aircraft it had leased to Russian aviation operators would be returned in the future.

The group has insurance cover for 19 aircraft under a number of policies and it has filed “insurance claims and a litigation claim to recover amounts due under the policies”, it said at the time, without providing further details.

Foreign lessors have lost control of about 435 planes in Russia, according to aviation advisory group Ascend by Cirium.

The future for these aircraft looks “bleak”, it said, adding that for their rightful owners, insurance will likely be the only recourse to reclaiming value for those assets in the long term and many of these assets will never again be seen in international markets.

DAE’s revenue at the end of 2022 declined to $1.14 billion from $1.24 billion a year earlier, as leasing income declined. However, cash flow from operating activities increased by 12 per cent on an annual basis to $1.28 billion.

“Our full year 2022 financial results reflect continued air travel recovery, and heightened demand for aircraft from airlines globally,” said Firoz Tarapore, chief executive of DAE.

“Our balance sheet at year-end 2022 remains strong with a net-debt-to-equity ratio of 2.64 times, and a liquidity coverage ratio of 341 per cent.”

DAE remains active in “all origination channels” and acquired 94 aircraft in 2022 for both its owned and managed businesses, he said.

In the fourth quarter of last year, DAE completed the acquisition of Sky Fund I Irish and its subsidiaries.

Following the deal, DAE Capital’s fleet of owned, managed and committed aircraft, as well as those it has a mandate to manage, grew to about 500, DAE said in November.

About half of its owned portfolio comprises fuel-efficient, next-generation aircraft.

“This acquisition of mainly next-generation, fuel-efficient aircraft supports our continued growth and furthers our commitment to invest in new technology aircraft, reducing the emissions intensity of our overall fleet,” Mr Tarapore said in a statement at the time.

The company, which repurchased its bonds worth $146 million from the open market in December, has signed new deals for unsecured term financing worth $800 million to maintain strong liquidity levels.