Continued Growth & Stability For Aircraft Financing In 2019 & Beyond, Boeing Predicts

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Boeing’s annual Current Aircraft Finance Market Outlook report evaluates and forecasts financing sources for new commercial aircraft deliveries, as well as longer-term funding requirements for the aviation industry. In its latest report, released in December and covering 2019, Boeing predicts continued stable growth and “broad, diversified funding” for the coming year, noting that strong anticipated demand for new commercial aircraft should result in roughly $143 billion in financing investments (up from $126 billion in 2018), with potential to exceed $180 billion by 2023.

About The Report

The CAFMO report also investigates trends concerning major financing sources for new commercial aircraft deliveries and their potential impact on the broader aviation market. Tim Myers, Boeing Capital Corporation president, describes the current aircraft financing market as healthy and possessing adequate commercial liquidity, thus “providing a wide range of efficient options” for customers. “We expect another year of balanced funding for commercial airplane deliveries in 2019, mirroring the broader industry, primarily split between bank debt, capital markets, and cash,” he says.

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In its recently released Current Aircraft Finance Market Outlook report for 2019, Boeing notes that strong predicated demand for new commercial aircraft next year will result in about $143 billion in financing investments, with the potential to grow to over $180 billion by 2023. (Image courtesy of Boeing.)

Myers said based on increasing understanding of aviation’s “strong growth potential and the industry’s attractive returns,” Boeing is seeing continued “innovations and first-time entrants into the market.” That’s providing greater funding capacity for new deliveries, pre-delivery payments, mezzanine-debt financing, and the secondary aircraft market.

Elsewhere, this year’s report notably includes a secondary aircraft financing market outlook and expanded analysis of additional funding resources, including leasing, tax equity, and the insurance market. Boeing says the secondary aircraft market “represents a significant financing and investment opportunity,” noting that owners of the 21,000-plus “commercial (Boeing and Airbus) aircraft in service today will drive refinancing requirements in the range of $43 billion per year.”

More Highlights

Boeing anticipates that funding for aircraft deliveries will be balanced between commercial bank debt and capital markets and cash in the coming year. Boeing also expects airlines and lessors to have “some of their lowest historical costs of financing.”

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In its annual Current Aircraft Finance Market Outlook report for 2019, Boeing details the funding distribution for the company’s aircraft deliveries from 2010 to 2018 by region and according to such categories as capital, cash, export credit, and bank debt. (Image courtesy of Boeing.)

Boeing expects unsecured borrowing to bolster continued growth of capital markets. Boeing notes aircraft leasing now represents more than 40% of in-service commercial aircraft ownership. Particularly in the United States, meanwhile, export credit agencies remain a “small but critical funding source,” says Boeing, which adds that strong industry fundamentals are drawing more investments and participates for new aircraft deliveries and the used aircraft market.

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Source: Boeing

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