Boeing forecasts more options for airline financing in 2016
Boeing says airlines and lessors will continue to have access to efficient funding at attractive pricing throughout 2016 as new participants enter the aircraft financing industry and current participants innovate and provide more options.
The eighth annual Boeing Current Aircraft Finance Market Outlook, released today, forecasts the sources of financing for new commercial airplane deliveries in the coming year and the industry’s overall delivery financing requirements for the next five years.
“The sustained strength of the aircraft finance markets is being driven largely by healthy aviation industry fundamentals and balanced supply and demand for commercial aircraft,” said Tim Myers, president of Boeing Capital Corporation.
“Passenger traffic is growing above long-term trends, airplane utilization and load factors continue to rise, replacement demand remains strong and global airlines are producing record operating results and profits. With these conditions prevailing, financiers continue to see commercial aircraft as a good investment and that’s resulting in good access to efficient funding for our customers.”
Boeing forecasts continued strong demand for new commercial airplanes in 2016, resulting in about $127 billion in deliveries across the industry.
“We’ve seen a number of new entrants in the aircraft financing industry over the past few years and we expect to see more this year as commercial aircraft continue to be seen as attractive, stable assets,” Myers said. “One of the exciting things to watch this year will be the way existing participants respond to the new entrants, driving innovation and creating more funding options for airlines and lessors.”
Key elements of the 2016 finance market outlook include:
- The trend of lessors selling all or part of their portfolios to participants in the capital markets to create capacity for new acquisitions and opportunities for future growth should continue, thanks to ongoing innovation within the leasing industry
- Lessors are expected to support about 40 percent of all deliveries, securing most of their leverage through the capital markets
- Capital markets and banks should account for approximately two-thirds of delivery funding
- Commercial bank debt will continue to play a vital role in aircraft finance, but tighter global regulations and U.S. dollar pressures (in certain markets) may constrain the sector’s volume
- Export credit usage should continue at historically low levels, reflecting the current strength of commercial markets