Published Dec. 12, 2013
Forecasts call for jetliner deliveries in 2014 totaling $112 billion, with 95% of that expected to be split between Boeing and Airbus, the report said.
Boeing projects that investors and financiers in the major aircraft finance markets will deliver balanced liquidity to fund continued production.
Kostya Zolotusky, managing director of capital markets development and leasing at Boeing Capital Corp., the company’s financing and leasing unit, expects “realignment and balance” to describe 2014’s aircraft financing environment.
“We anticipate adequate financing at reasonable prices, as the industry works to respond to balanced global customer demand and an accelerated replacement cycle resulting from higher fuel prices,” Zolotusky said in a statement.
Boeing sees many new bank participants entering the market. The leasing market has evolved during the past decade from five equally competitive lessors to several times that many today.
Capital markets are continuing to expand as a source of funding for both U.S. and international airlines, as well as leasing companies, Zolotusky said.
“All of this is possible due to balanced global air travel demand and a replacement market driven by higher fuel costs and the attractiveness of new, fuel-efficient airplanes,” Zolotusky said.
The report indicated that airlines are declining their use of export credit agencies’ financing from the Export-Import Bank as the use of commercial aircraft-backed bond issuances rapidly expands.
According to the report, these factors are expected to result in an almost even balance among primary aircraft financing sources, including aircraft leasing companies, commercial banks, the capital markets and export credit agencies.
The report also noted signs of improvement in used aircraft financing after several years in which higher fuel prices and other economic factors disrupted the balance between the new and used jetliner markets.
“We continue to watch how global monetary policies could potentially impact aircraft finance,” Zolotusky said. “However, we believe the industry is well-positioned for the outcomes of inflation, higher interest rates or a combination of both.”