Jetrader - Spring 2014 - 16

Boeing entered 2014 with wind-tunnel tests fully underway
for its new 777X program, which the U.S. manufacturer
launched in late 2013 at the Dubai Air Show. The company
expects 2014 to again be marked by record industry-wide
deliveries after the world's commercial-jet builders surpassed
a record $100 billion-plus in new airplanes turned over to
customers in 2013. (Boeing photo)

2014 Aircraft Financing-
A Manufacturer's View
Boeing forecasts new-plane market's continued health as
used market adjusts

If you're fortunate enough to be lined up to take home a new,
fuel-efficient, commercial jet in 2014, the odds are pretty good
that you'll be able to find sufficient and efficient financing to
follow through on the deal.
And if you're looking to refinance or pick up an older airplane,
you'll probably encounter some lingering challenges as the secondary market continues to adjust to the premium operators and
lenders' accord to new airplane products.
That's Boeing's elevator speech on its annual air finance market
outlook for 2014, when, again, the world's jetliner builders expect
to see record unit production valued at roughly $112 billion. Most
of that should be split between the Seattle-based brand and its
European competitor.
Markets in 2013 played out pretty much in line with Boeing's
forecast as borrowers found adequate liquidity despite jitters over
whether the high production rates were justified and if aircraft
useful lives were shortening.
At the same time, the market was focused on watching aircraft
export credit agency (ECA) support as the agencies started charging higher rates and making ECA deals more expensive.
According to Tim Myers, vice president and general manager
for aircraft financial services at lending and leasing unit, Boeing

Capital Corp. (BCC), the plane maker expects generally smooth
flying for financing deals as 2014 unfolds.
"We describe the financing watch words for the year as realignment and balance. We expect balanced liquidity at reasonable
prices as the industry works to respond to balanced global customer demand and an accelerated replacement cycle resulting
from higher fuel prices," Myers said.
Pointing to Boeing's well-known "dashboard" of expected
market conditions (see Chart 1: Aircraft Financing Environment),
Myers foresees generally healthy conditions for most of the major
funding sources-leasing companies, commercial banks, the burgeoning capital markets, private equity and hedge funds, tax
equity, and new sources like private placements and regional
financial institutions.
Global politics surrounding export credit agencies-particularly the role of the Export-Import Bank of the U.S. as it faces
a Congressional reauthorization in 2014-raised the forecast's
concern for how government-backed borrowing could affect overseas buyers and lead toward more expectations for manufacturer
backstop support.
"We saw the OECD's new global Aircraft Sector Understanding
start to drive down ECA use in 2013, and we expect the trend

16 The ofﬁcial publication of the International Society of Transport Aircraft Trading

Jetrader - Spring 2014

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