Boeing Sees Continuing Strong Supply of Aircraft Financing

 - April 14, 2021, 1:01 PM
The aircraft financing environment closed out 2020 with enough liquidity to finance deliveries overall but stresses persist, particularly in the bank debt and tax equity markets. (Image: Boeing)

Funding will continue to flow into the aircraft financing sector as the aviation business navigates the global Covid pandemic and vaccine deployment continues to accelerate, according to Boeing’s 2021 Current Aircraft Finance Market Outlook (CAFMO). As the first formal forecast Boeing has produced since 2019, this year’s outlook reports the aircraft financing environment ended 2020 with enough liquidity to finance deliveries, but with stresses in the bank debt and tax equity markets. 

"Financiers and investors understand the industry's resilience and the long-term fundamentals that make aircraft a valuable asset class," said Boeing Capital Corporation president Tim Myers. “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.”

Myers added that industry fundamentals continue to show varying degrees of strength in different markets during the pandemic.

Boeing’s figures from last year show commercial aircraft delivery funding volume totaled $59 billion, representing a 40 percent decrease from 2019 levels. Meanwhile, aircraft lessors executed a “significant” volume of sale-leaseback transactions, said the manufacturer, and the industry-wide leased fleet climbed to 46 percent.

Last year, institutional investors and funds continued to seek aviation exposure as some financiers paused and sector credit spreads widened. Boeing also said that export credit agencies remain a small but important funding source during the pandemic. Finally, so-called credit enhanced financing saw further progress as a complementary funding source, accounting for 4 percent of the financing for Boeing deliveries.