While U.S. ExIm Bank financing remains closed to deals valued at more than $10 million, Boeing last year saw foreign export credit agencies from the UK and Italy step in to help guarantee credit lines from third parties to support their own suppliers, thereby further strengthening a global aircraft finance market that Boeing Capital Corporation president Tim Myers called more robust than any he has seen in his career. Speaking Monday with reporters via conference call from an aviation finance conference in San Diego, Myers emphasized the significance of those recent additions, as well as a projected increase in insurance industry participation in financing Boeing aircraft from 2 percent last year to 5 percent this year. Nevertheless, he also stressed the importance of export credit agency financing during inevitable lean periods.
“Innovation abounds in this business,” he said. “Boeing worked very closely with the insurance markets last year and launched AFIC, which is the finance and insurance consortium. That company has already done over a billion dollars in financing alone. In the meantime, we’re being supported by those countries who supply a lot of product and parts to the Boeing Company, by their export credit agencies.”
Still, Myers warned of “exogenous shocks” that threaten to disrupt several straight years of good liquidity. For events such as the financial crisis of 2008-2009, ExIm Bank financing often proves critical in maintaining the flow of aircraft deliveries.
“When you look at the financial crisis in ’08-’09, these markets shut down very quickly,” he explained. “What happened is that ExIm and the other ECAs stepped in, and ExIm in ’09 and ’10 took over 30 percent of the Boeing deliveries. So as much as I’d like to say there’s tremendous liquidity today, and we’re creating new options, there’s always a chance where we hit a liquidity crisis.
“There’s also, when you look at a level playing field, having an export credit agency behind us as the number one exporter in the United States...is a tremendously powerful tool,” he added. “You get a lot of transactions that are government to government, and whatever insurance products we can create you can’t create that kind of competitive power.”