ILFC takes $1.1bn charge on widebodies, mainly A340-600s

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Operating lessor ILFC has incurred a $1.1 billion impairment charge, mainly related to Airbus A340s, according to its parent company’s third quarter earnings results.

“ILFC concluded that the net book values of certain four-engine widebody aircraft in its fleet are no longer supportable, based upon the latest cash flow estimates because the estimated holding period is not likely to be as long as previously anticipated,” says American International Group in a regulatory statement.

According to the insurer, the charge, filed as part of ILFC's separate-company statements, stems from "Airbus A340-600s in particular".

High fuel prices, more fuel-efficient aircraft, and the success of competing aircraft models have resulted in a shrinking operator base for these aircraft types, AIG adds.

Approximately $1 billion of the $1.1 billion charge was recorded in the three months to 30 September.

In the three- and nine-month periods, AIG recorded pre-tax losses of $582 million and $1.8 billion, respectively, on the sale of the lessor.

AIG previously recorded a $6.7 billion pre-tax loss and a $4.4 billion after-tax loss on the sale of ILFC for the year ended 31 December 2012.