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International Lease Finance Corp. may suffer a "drag" on profits this year after repossessing aircraft from bankrupt airlines during the first quarter, though write-downs on its huge fleet have stabilized.
The unit of American International Group Inc. (AIG) reported pre-tax profits of $120 million in the quarter, level with a year ago, including $55 million in impairments against a fleet of 930 planes.
High jet fuel prices, sluggish demand and over-ambitious expansion strategies have taken their toll on the global airline industry, with high-profile collapses including Spain's Spanair and Hungary's Malev, both ILFC customers. This has forced leasing companies to recover planes and find new customers.
ILFC also revealed that it opted to scrap some of the repossessed planes, using a parts specialist it acquired last year.
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