Boeing expects the aviation finance sector to continue to have diversified funding around the world as the aviation sector accelerates global pandemic and vaccination campaigns.
“Financiers and investors are aware of the adaptability and long-term industry fundamentals that make aircraft a valued asset class,” said Tim Myers, president of Boeing Capital Corporation. “Despite the unprecedented impact of Covid-19 on the global aerospace industry, our customers generally still have liquidity in the market and we expect the situation will improve once travel recovers.”
The Boeing Current Aircraft Finance Market Outlook 2021 CAFMO (annual report on the financial situation of the aviation market), published for the first time since 2019, reflects Boeing’s short-term view of market dynamics and evaluates the sources of funding for new deliveries of commercial aircraft. Due to the impact of the pandemic, the CAFMO 2021 report does not include the usual funding projections for one and five years.
“Industry fundamentals continue to show different strengths in different markets based on regional trends of the global pandemic,” added Myers. “We anticipate that established players will continue to fund the sector and that there will be new entrants looking for opportunities as the sector recovers.”
The CAFMO 2021 report shows that the 2020 aircraft finance environment closed with sufficient liquidity to cover shipments, despite tensions in the bank debt and tax deduction-related finance markets. The CAFMO 2021 report, introductory video and funding information by region are available at www.boeing.com/CAFMO.
Some highlights from the report:
– At the sector level, funding for commercial aircraft delivery was $ 59,000 million, down 40% from 2019.
– The main sources of funding for Boeing shipments were Treasury, bank debt and capital markets, and 100% of Boeing shipments were funded by third parties.
– Aircraft rental companies carried out significant sales and retrolease volumes, and the total leased fleet increased to 46%.
– The volume of aircraft financing in the capital markets was 70% higher than in 2019.
Commercial banks supported the aviation sector’s liquidity needs at the start of the pandemic, but long-term bank debt was one of the least-used forms of finance.
– Institutional investors and funds continued to seek exposure to the sector and increased their activity as some lenders paused and credit spreads in the sector widened.
– Export credit agencies continued to be a small but important source of funding during the pandemic.
– Credit enhancement funding has evolved as a source of complementary funding, up to 4% of total funding for Boeing supplies.
Boeing’s 2020 Annual Commercial Market Outlook report, which takes into account the 20-year outlook for the commercial aircraft and services market, forecasts passenger growth averaging 4% per year.
The global merchant fleet is projected to reach 48,400 aircraft by 2039, up from 25,900 today.
Boeing Capital Corporation provides financial solutions worldwide.
Boeing Capital, a subsidiary of The Boeing Company, offers asset-backed loans and leases with an emphasis on assets that are essential to the strategic business of Boeing customers.
Boeing Capital’s primary role is to support Boeing’s other businesses by ensuring that customers get the funding they need to buy and maintain their Boeing products.
Boeing Analysis of the Current Environment for Aircraft Finance:
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