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ILFC Faces Additional Writedowns on Aircraft Fleet

March 09, 2012, 07:30 AM
Filed Under: Aircraft

MarketWatch reported that International Lease Finance Corp. said it could face additional writedowns on its aircraft fleet after revealing the results of stress tests on a portfolio that has already suffered more than $3 billion in
charges over the past two years.
According to the report, ILFC took $1.6 billion in charges in 2011 against 100 aircraft from a fleet of almost 939 owned aircraft, and revealed the potential for more in an earlier regulatory filing. However, new methodology employed since year-end would have reduced the number of planes affected last year to 95.
As reported, according to the company, changing cash flow assumptions used to calculate last year's charges could ensnare up to 114 more planes with a net book value of $2.1 billion, assuming cash flow estimates fall 20% short. Much of this could translate into a charge as impaired planes are generally only worth the sale price of their engines and spare parts.
ILFC's charges -- and the prospect of more -- come as the leasing sector deals with the fallout from a spate of airline collapses this year. The company said four customers had stopped flying or filed for court protection in 2012,
returning 42 planes to ILFC's fleet of around 1,000 aircraft. While more than half had been placed with other carriers, the plight of airlines this year is worse than in 2011 when ILFC had nine planes returned from seven distressed
carriers. Last year's returns led to a charge of $40 million.


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