Dubai Aerospace Enterprises Has Written off $576.5 Million in Planes That Were Leased to Russia

November 7th, 2022
← Back to blog

Dubai Aerospace Enterprises Has Written off $576.5 Million in Planes That Were Leased to Russia

Emirates and Etihad, two of DAE’s major offtake partners, have canceled all orders. This resulted in the write-off of 22 aircraft from the company’s total fleet of leased planes worth $576.5 million by the end of Q3 2020.

Financial Report

Despite the company suffering a $335 million dollar loss in the 9 months between January and September, they did manage to generate $204 million dollars in profit before the exceptional items were accounted for. The company also saw a 20% increase in available cash flow, allowing it to sustain its current operations.

Firoz Tarapore, CEO of DAE, believes that the steadily rising interest rates and limited aircraft availability have created a tough operating environment. However, he also noted that despite these challenges, demand continues to grow. In his statement, he said

There is such a global shortage of available aircraft that rental rates are rising, and the residual value for entire fleets is increasing. Airlines continue to invest in new aircraft, especially in hotspots where the demand for air travel is strong.

In today’s interview, Tarapore shared that the company is noticing positive changes because of our engineering team, which is making huge strides in reducing fuel consumption. Both of these reductions will help decrease the carbon footprint and operating costs associated with the business. Tarapore said, “We enhanced our ESG standing with a voluntary disclosure to CDP, one of the world’s leading environmental disclosure platforms, which will help to create further transparency for all”.

DAE Engineering managed to post record-breaking revenues in the just-completed quarter, demonstrating the success of its strategic roadmap. With all hangar space occupied for the final quarter of the year, we can expect DAE Engineering to post its best year ever in 2022.

Stuck Plane

Three of the 22 aircraft DAE leased to Russian carriers were returned before the sanctions were put in place. It is uncertain if sanctions will allow for the remaining aircraft to be returned. DAE enacted an insurance policy beforehand in case the lessor is unable to recover the assets, to protect them from losing money. The DAE spokesperson shared the following about the 19 unattainable assets,

“A small number of aircraft from foreign lessors were left in Russia when the sanctions kicked in. Roughly 435 aircraft from abroad are now leased by Russian-based air transit companies; that totals to about five planes. Rather than helping the aviation industry, this is actually causing significant financial hardship on those involved with capital tied up in inaccessible airplanes”.