Boeing

Overview

Two years into the global pandemic, aviation financing trends marked 2021 as a year of industry recovery. Boeing Capital remains optimistic and forecasts there will continue to be sufficient liquidity to support new aircraft deliveries.

The 2022 Commercial Aircraft Finance Market Outlook shows commercial aviation required about $64 billion in delivery financing during 2021, up from $59 billion in 2020. Lessors shifted from negotiating lease deferrals to bidding for new business and the capital markets gave a vote of confidence by providing most issuers with pricing near pre-pandemic levels. Where there were shortfalls, export credit and institutional investors provided the necessary financing to support airlines.

Export credit agencies

Supporting about 9% of funding for the industry and nearly 5% of Boeing deliveries in 2021, export credit-backed financing plays a crucial role to instill confidence in times of market dislocations. Boeing has agreements with export credit agencies around the world to bring the benefits of aviation and boost local economies.

Charts

Institutional investors and funds

Aircraft are an attractive asset class and the pandemic created opportunities for institutional investors and alternative asset managers to expand their aviation exposure at their targeted levels of return. New funds and institutionally-backed leasing platforms took advantage of discounted asset prices and widened credit spreads, stepping in where traditional providers of capital retrenched.

Tax equity

Access to tax equity financing, especially for JOL and JOLCO, is sensitive to local jurisdictions and the overall economic health of respective home markets. Tax equity investors continue to be cautious due to the pandemic, recent restructurings and on-going litigation. A gradual recovery in line with local economic growth and an increase in deliveries from qualified airline credits is expected.

Credit enhanced

Credit enhanced products, such as aircraft non-payment insurance, continued to be an important financing alternative. While there were no transactions for delivery financing of Boeing aircraft in 2021, deals in the secondary market saw activity. While bank debt remains limited in the short term, credit enhanced backing may be looked upon to broaden access.

Charts

Airframe and engine manufacturers

Ample availability of commercial solutions and export credit were available for new Boeing deliveries in 2021. Consequently, there was no need for manufacturer funding support for Boeing deliveries in 2021.

Methodology

Boeing Capital created the Commercial Aircraft Finance Market Outlook (CAFMO) to provide an analysis of the sources of financing for new commercial airplane deliveries (for aircraft 90 seats or above).

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