Ireland’s Multi-Billion Aircraft Leasing Sector Continues to Grow

Added on 26/10/2015

According to the Irish Independent Ireland is now home to nine of the ten largest aircraft leasing firms in the world.

Annual results for five of the top firms based here - SMBC, Pembroke Capital, Awas Capital, GECAS and Avolon - show aggregate pre-tax profits of US$650m in 2014 on revenues of US$3.25bn. SMBC Aviation Capital alone owns and manages 417 aircraft valued at over US$15bn on lease in over 40 countries around the world.

The book value of Pembroke Capital's aircraft portfolio, meanwhile, was value at €1.32bn at the end of last year.

According to Prof John Fitzgerald, the income from leasing in the Irish economy - with the vast majority related to aircraft leasing - totalled almost €8bn in 2013.

However, in a written Dail response to Fianna Fail's Michael McGrath, Minister Noonan has confirmed that the corporation tax take over the past five years from the aircraft leasing industry is €123m.

During the same five-year period, the tax receipts to the exchequer from the industry were hit by the State making net VAT repayments to aircraft leasing firms totalling €83m that included €15m in net VAT repayments last year.

The industry employs 1,000 directly and 2,000 indirectly currently while in addition, the State estimates that the total spent by aircraft lessors on Irish professional services is in excess of €135m per annum.

At board level at the top firms, the rewards are enormous with one airline executive, ceo of Avolon, Domhnall Slattery, receiving a $2.6m bonus last year while executive pay in the sector can run from $300,000 to a $1m a year on average.

The high pay in the industry is reflected in the employer's PAYE payments last year totalling €55m - €32m or 139pc more than the corporate tax payments of €23m.

The total amount received in various taxes from aircraft leasing firms last year totalled €63m. The aircraft leasing industry's taxable profits are not available for last year.

However, Minister Noonan said that the industry's taxable profits for 2013 were €231m when corporation tax of €29m was paid and €178m in 2012.

The growth of aircraft leasing has been facilitated by targeted tax rates and rulings as well as the development of a comprehensive network of tax treaties.

Deputy McGrath said: "Ireland was the birthplace of the aircraft leasing industry nearly 40 years ago.

"A supportive tax environment and legal regime have been key elements of the growth of the sector.

Commenting on the figures, Deputy McGrath said: "Nearly 50pc of the world's commercial aircraft fleet is now managed from Ireland.

"These are good, well paying jobs and the industry is a very significant contributor in terms of employment numbers and tax revenue.

He added: "It is important that we constantly renew our product offering and the tax regime that underpins it in order to maintain our existing level of business and if possible secure an even greater share."