Jetrader - January/February 2013 - 10

traveling, is growing at a faster rate than new capacity being introduced into the system. These are all fundamental measurements that show by every measure that the aviation market is healthy and perhaps even a little underserved. For the OEMs, most conversations with customer aren’t about how we can reschedule or cancel; rather can we deliver airplanes earlier.” Bigger buckets – Boeing for 2013 is predicting total industry deliveries for both large and small commercial jetliners of roughly $104 billion, with nearly all of that split between Boeing and Airbus (See Industry aircraft delivery ﬁnancing outlook chart). Its view of capital sources show that cash remains a viable option as airlines globally continue to deleverage, while the aforementioned bank contributions should rise along with continued expansion of funding by the capital markets. Most lessors’ leverage should come from these two sources, with parent company balance sheets expected to fund only about 5 percent of deliveries. Other Sources – Leasing ﬁrms: With export credit and commercial bank debt available, but at higher prices, more airlines are expected to turn to leasing. By the end of the decade, Boeing estimates that more than half the world’s airline ﬂeets will be supplied by lessors — up from around

40 percent today. Demand, aided by the historically strong investment performance of commercial aircraft, should ﬁnd lessors able to tap banks and the capital markets for most of their funding needs. Capital markets: The growth seen in 2012 in the capital markets, primarily in the U.S for airlines based there, should continue to increase according to Boeing’s projections. In 2012, yields on new EETCs from U.S. airlines reached record-low yields and Doric issued a EETC backed by payments from Emirates, the ﬁrst non-U.S. EETC in almost a decade. 2013 should see further market growth as lessors and others expand their use of aviation bonds. Meanwhile, rating agencies will be challenged to better understand the leasing industry in the process of rating bond deals, and to help non U.S. airlines see the advantages of entering the capital markets OEMs: With continued strong support from commercial sources, the forecast expects manufacturers’ funding to remain in line with recent history. However, lingering uncertainties are likely to see more calls by customers for backstops for future deliveries No surprise from export credit – The anticipated and higher fees and equity requirements as a result of the new ASU are forecasted to drive down airline reliance

on government-backed loan guarantees in 2013. Barring any severe market shock, Boeing expects to see ECA support gradually heading back toward historical levels. “Export credit in 2012 played out as expected and, as anticipated, it was highly politicized in both the U.S. and Europe, and we expect it to continue to be as the U.S.Europe “home market rule” sees pressure and export credit overall is challenged by its critics,” Zolotusky added. Secondary Markets: A new view – The company’s forecast this year adds a look at reﬁnancing requirements (see Secondary market ﬁnancing requirements chart) in response to feedback from forecast users. “We peg the need at somewhere around $11 billion,” Zolotusky said, who added that the market’s liquidity has been limited by the broader ﬁnancial downturn and higher fuel prices.” However, we’re seeing the price disruption between new and used airplanes drawing more available capital here from banks, private equity and the capital markets, which is in line with our view that airplanes are fungible and high-performing assets” Zolotusky said. Ed. Note: Thanks to Boeing for supplying the editorial content for this article. To see the complete Boeing Current Aircraft Finance Market Outlook for 2013-2017, visit www.boeingcapital.com/cafmo

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Jetrader - January/February 2013

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