Jetrader - Spring 2017 - 35
2017 Finance Outlook
Boeing Forecasts Diverse Sources & Players
Boeing says strength in the capital markets
and innovative funding developments will
provide airlines and lessors efficient aircraft
financing solutions in 2017.
The ninth annual Boeing Current Aircraft
Finance Market Outlook forecasts 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.
"We're seeing increasingly diverse financier and investor activity in the aircraft
financing industry, providing more options
to meet most growth in funding needs,"
said Tim Myers, president of Boeing Capital
Corporation. "Access to commercial bank
debt and continued participation from the
capital markets in 2017 will allow airlines
and lessors to capitalize on the strength
of the aviation industry and robust global
passenger traffic trends."
Boeing forecasts continued strong
demand for new commercial airplanes
in 2017, resulting in about $126 billion
in deliveries across the industry with
potential to grow to $185 billion by 2021.
The industry forecast reflects disclosed
upcoming deliveries from Boeing, Airbus,
Bombardier and Embraer for jets sized
90 seats and above.
To meet this forecast, ISTAT Board
of Directors member Kostya Zolotusky,
managing director of capital markets and
leasing for Boeing Capital Corporation,
described the financing options available
as balanced and robust as the attractiveness
of investing in aircraft expands.
"Above-trend aviation market demand
continues to fuel the appeal of commercial
aircraft assets across the industry, and new
players are taking notice," Zolotusky said.
"As institutional investors continue to diversify outside of real estate, for example, aircraft present an attractive alternative. This
expanded investor community is stimulating
lessors' ability for a greater deal flow and
stronger portfolio turn."
Taking a global view, Zolotusky went on
to say that China continues to be a growing
source of bank debt for aircraft deliveries;
while most other bank markets remained
stable or showed small declines, the 2017
forecast shows a slight uptick for China's
bank sector. This trend is primarily driven
by the rising share of deliveries to China.
The CAFMO also acknowledges to "watch
items" like the effects of regulations and policies on market conditions. Of note, 65 nations
have acceded to the Cape Town Convention
with Aircraft Protocol as of September 2016;
the commitment to further grow the number
of ratified nations and improve the efficiencies of cross-border trade is of broader
importance to the industry.
"Capitalizing on the growth ahead requires
regulations and policies that facilitate the
efficiency and stability of the aircraft
financing industry. Banking regulations that
sensibly value aircraft assets and continued
efforts to move toward global standardization of transactions through the Cape Town
Convention will help ensure long-term availability of aircraft financing," Myers added.
"Further, while the healthy financing environment has helped to absorb the impact of
the lack of export credit in the short term,
history shows this is not sustainable."
Highlights of the 2017 outlook include:
* Notable new funding sources are emerging from the Korean institutional market,
regional banks throughout Asia Pacific
and a rise in non-U.S. investor participation in enhanced equipment trust certificates (EETCs).
* High volume in the leasing industry will
allow new lessors to grow their fleets
and established lessors to purchase
* Commercial bank volume will exceed capital
market funding for both Boeing deliveries
and the industry overall.
The 2017 Boeing Current Aircraft
Finance Market Outlook is available at
Editor's Note: Thanks to Boeing for supplying editorial
content for this story.
Industry growth needs, sources of global bank debt charts.
Jetrader * Spring 2017 35