Boeing Projects Sufficient Aviation Capital Finance Availability for Aircraft Deliveries
Boeing’s 2021 Current Aircraft Finance Market Outlook (CAFMO) reports that the aircraft financing environment ended 2020 with enough liquidity to finance aircraft deliveries.
On Wednesday (April 14, 2021), Boeing projected that global and diversified funding will continue to flow into the aircraft financing sector. The company’s 2021 Current Aircraft Finance Market Outlook (CAFMO) reports that the aircraft financing environment ended 2020 with enough liquidity to finance aircraft deliveries, but acknowledges certain stresses, particularly in the bank debt and tax equity markets. Boeing’s CAFMO, first published in 2019, reflects the company’s near-term view of market dynamics and assesses financing sources for the delivery of new commercial airplanes.
In Wednesday’s announcement, Boeing Capital Corporation’s President, Tim Myers, said,
“Financiers and investors understand the industry's resilience and the long-term fundamentals that make aircraft a valuable asset class. Despite the unprecedented impacts of COVID-19 on the global aerospace industry, there generally continues to be liquidity in the market for our customers, and we expect it to further improve as travel begins to rebound. Industry fundamentals continue to show varying degrees of strength in different markets depending on the regional trends of the global pandemic. We expect that capital will continue to be routed into the sector by established players and as new entrants seek opportunities during the industry's recovery.”
For 2020, at the industry level, commercial aircraft funding decreased 40 percent to $59 billion from 2019. The top sources of financing for Boeing delivered aircraft were cash, bank debt and capital markets, with 100 percent of Boeing deliveries financed by third parties. Aircraft lessors executed numerous sale-leaseback transactions and the leased portion of the industry-wide fleet grew to 46 percent. Although commercial banks shored up the industry’s liquidity needs early in the pandemic, long-term bank debt has become one of the less utilized forms of financing. Export credit agencies have remained a small but important funding source throughout the pandemic. Boeing’s separate 20-year forecast, the Boeing 2020 Commercial Market Outlook, projects average annual traffic growth at 4% and an increase in the global commercial fleet to 48,400 by 2039, up from the current level of 25,900.
Boeing (NYSE:BA) is the world’s largest aerospace company and leading supplier of commercial airplanes, defense, space and security systems, as well as global services. The aerospace giant tops the list of the largest U.S. exporters, providing a significant positive impact to America’s annual GDP. Boeing supports government and commercial customers in over 150 countries and employs more than 160,000 team members worldwide. As Boeing continues to deliver for customers, they are committed to their legacy of aerospace leadership in technology and innovation and will continue investing in their people for future growth.