The 2019 Current Aircraft Finance Market Outlook forecasts another year of stable growth and funding diversification. The aviation industry has shown an exceptional level of resiliency in a dynamic environment, demonstrating the underlying strength and value of air travel. For the ninth straight year, passenger traffic recorded above-trend growth with historically high load factors and aircraft utilization rates.

This consistent passenger growth, along with the continued health of the air cargo market, is allowing the industry to grow efficiently despite oil price headwinds and the rising U.S. interest rate environment.

Airlines and lessors are expected to have some of their lowest historical costs of financing, so long as interest rate hikes are gradual and the industry continues to successfully navigate past external challenges.

Last year saw the expansion of global participation in aircraft financing, increased capacity for pre-delivery payment and mezzanine debt financing, and the continued maturity of the global aircraft financing legal framework; these trends are expected to continue in 2019. Lessors will continue to play a vital role in supporting new airplane deliveries, while sourcing a greater share of their portfolios from direct order books.

All-in-all, 2019 is expected to be another year of strong and efficient liquidity from diverse markets.


Since its inception in the early 1970s, aircraft leasing has grown to represent more than 40 percent of in-service commercial aircraft ownership and is now an integral part of the aviation industry.

Lessors continue to build their portfolios with a balanced strategy. During 2018, 50 percent of Boeing deliveries involving lessors were sale leaseback (SLB) transactions, while the other half were from lessors’ direct orders. Moving forward, the lessors’ growing order book for new generation airplanes and significant competition in the SLB market should meaningfully increase the share of direct purchase aircraft.

Lessors continue to have access to ample liquidity, with investment-grade companies accessing capital markets on an unsecured basis at historically low rates.

The success of this market segment has encouraged new entrants into aircraft leasing. In 2002, there were fewer than 100 leasing companies, with the top two lessors maintaining more than 40 percent market share (by aircraft). Today, there are more than 150, with the top two lessors accounting for approximately 20 percent of the market. While some consolidation has taken place, it has been more than offset by new participants, leading to an increasingly diverse market.

Capital Markets

Capital market activity increased over the past year, accounting for nearly 28 percent of new delivery financing. While enhanced equipment trust certificate (EETC) transactions are down relative to previous years, this has been offset by increased capital market borrowing by highly-rated lessors. Lessors continue to utilize the asset-backed security (ABS) market, which is on pace to match the previous year’s $6B in financings

The sector’s overall strength has been bolstered by the continued trend of unsecured borrowing, with more than 70 percent of all capital market transactions in 2018 being unsecured.

Commercial Banks

Commercial bank funding for new airplane deliveries reached record levels in 2018, nearing $50B. A slowing pace of regulatory changes, combined with attractive risk-adjusted returns, has encouraged banks to deploy capital into the aviation sector.

The banking market has evolved from a geographically concentrated one (i.e. North America and Europe) to a truly global environment. Asia continues to represent the largest source of banking liquidity, with China and Japan accounting for more than 40 percent of all bank debt for new aircraft deliveries. This trend is expected to continue, with nearly 17,000 aircraft to be delivered into Asia over the next 20 years.

Bank debt

Export Credit Agencies

Export credit agency (ECA)-supported transactions continued to be well below historical levels, with both major aircraft manufacturers lacking full access to their domestic ECAs. Interest from global ECAs to finance Boeing products increased over the past twelve months, where Boeing has an expanded presence. These sources, however, are not a satisfactory replacement for the U.S. Export-Import Bank, which remains a critical tool, particularly in the event that commercial financing conditions decline. In 2019, it is expected that export credit agency funding will continue to account for a small share of aircraft financing, as markets are anticipated to remain healthy and resilient.

Private Equity & Hedge Funds

The low-yield macroeconomic environment has encouraged fixed-income investors to broaden their investment parameters to include aircraft.

Private equity and hedge funds continue to be attracted to the aviation market, with its unique investment attributes such as steady cash flows from lease payments, global diversification and the strong fungible nature of aircraft as collateral. The majority of transactions in 2018 took place through equity investments in lessors and purchases of ABS portfolios.

Tax Equity

Tax equity remains a relatively small market focused on highly liquid assets. However, it is one that is rapidly growing and evolving as more airlines and lessors realize the benefits of this financing structure, and as investors in the major tax equity jurisdictions show greater interest in aircraft financing.


The insurance market, which provides aircraft non-payment insurance (ANPI) to banks and capital market investors, is a new and efficient source of financing that complements other funding sources. Introduced in 2017, it has become a growth area for aviation finance. The Aircraft Finance Insurance Consortium (AFIC), a syndicate of insurance companies, financed more than 30 aircraft in 2018, twice the volume of its initial year of operations.

Growth in this segment is expected as additional market participants provide more coverage solutions.

New Sources of Funding

One of the key developments over the past several years has been the growing geographical diversity of aircraft financing. Previously concentrated in North America and Europe, interest in funding aircraft is now global, with a particular rise recently in Asia.

Taiwanese and Korean investors are increasingly active in this space, and Japan, with its more than 100 regional banks, continues to participate in cross-border transactions due to the country’s extremely low interest rate environment.

Additionally, growth by more passive funding sources, such as large pension and sovereign wealth funds, continues to be driven by a growing understanding of aviation’s strong growth potential and the industry’s attractive returns.

Airframe & Engine Manufacturers

During 2018, airframe and engine manufacturers benefited from adequate commercial liquidity to fund new deliveries. If market dynamics remain consistent it is expected that this trend will continue into 2019 with sufficient third-party financing to support new deliveries. Export credit agencies, however, continue to remain a critical source of funding for when market conditions decline.

Secondary Aircraft Financing Market

In addition to new aircraft delivery financing, the secondary aircraft market represents a significant financing and investment opportunity. Owners of the more than 21,000 commercial (Boeing and Airbus) aircraft in service today, will drive refinancing requirements in the range of $43B per year.

In 2018, the market for used aircraft remained exceptionally resilient, with demand exceeding supply. The cargo market recovery has further stimulated the demand for freighter conversions, bolstering residual values. These factors should help support continued strength in the secondary financing market.

2019 CAFMO - Secondary Aircraft Financing Market


Boeing Capital created the Current Aircraft Finance Market Outlook (CAFMO) to provide a forecast of the sources of financing for new commercial airplane deliveries (for aircraft 90 seats or above) in the coming year as well as the industry’s total delivery financing requirements over the next five years.