Dec. 8, 2015: Boeing Capital Corp. sees a robust financing market next year for an estimated $127bn in new airplane deliveries.
The forecast is for the global picture, and not just Boeing Commercial Airplanes (BCA) deliveries.
In its new Current Aircraft Finance Market Outlook 2016, BCC paints a picture of financing that is the most optimistic in years. In its annual Green/Yellow/Red assessment of various financing sources, there are no Reds for the first time since 2011, although there are two Yellows—the Export financing credit agencies and the aircraft and engine OEMs themselves, which don’t like to do direct financing. All other sources are Green (Figure 1).
Capital markets and banks are forecast to account for two-thirds of the financing next year, BCC says.
“Much of the funding should flow to lessors, who are expected to support around 40% of new airplane deliveries,” BCC writes.
The broad availability of capital will reduce the reliance on export credit agencies, BCC says. Renewal of the US ExIm Bank authority came last week after Republicans in the US Congress killed renewal last summer. The Republicans, normally self-branded pro-business politicians, characterized the ExIm Bank as corporate welfare and specifically pointed to Boeing’s overwhelming beneficiary of ExIm guarantees while ignoring the hundreds of other companies that use ExIm for export financing.
BCC, echoing the Current Market Outlook issued annually by BCA, reports that despite a prolonged decline in cargo demand, “the long-term outlook for air cargo demand remains strong due to faster growth among developed economies and the expanding network of Sixth Freedom carriers. These trends should help drive a return to capacity balance and boost demand for new, fuel-efficient freighters.”
BCC projects that new aircraft deliveries will grow to $172bn by 2020.