"Bonding" with United Airlines

Last week saw a milestone event for the 787 program. It might go unnoticed by most aviation fans, but this was a grand slam in the world of aircraft financing. Our customer, United Continental Holdings, went to the financial markets to sell bonds to raise money to pay for its 787 and 737-900ER deliveries this year. Customers finance their airplane purchases virtually all of the time, but this was the first time a bond offering included the Dreamliner as collateral.

image/photo

The 787 Dreamliner sitting next to a United 737-900ER.

The bond sale made history by having THE lowest-ever, all-in pricing for an aircraft bond offering that wasn’t “wrapped” or reinsured by the issuer. Our colleagues at Boeing Capital Corp., the financing and leasing side of Boeing, were very excited by the news. In part, it’s because the Dreamliner is the first commercial aircraft in aviation history that was designed with the help of the financial community.

I can recall several years ago when we invited aircraft bankers, investors and appraisers to give us their thoughts on how we could make the Dreamliner more attractive to financiers. They had plenty of good suggestions, like making the airplane easier to place with operators or moving them from one leasing customer to another.

My BCC colleagues say the United Continental Holdings bond sale not only delivered extraordinarily “efficient” and well-priced financing for a valued customer, but it represents a warm welcome for the Dreamliner in the capital markets. These bond sales are looked on as an increasingly important way for airlines to raise funds to pay for new airplanes. We see it as validation that the 787 is a great airplane, not only for its new technologies and passenger experience, but as an appealing asset for investors.

Comments (6)

V V (Montréal, Québec):

I know that bonding technology is very important when you build composite aircraft. Now I see that you can also apply bonding techniques for aircraft financing.

Justin (Newark):

I can't wait for United to get its first 787. Exciting days ahead Randy.

Steve Beach (Long Island, NY):

Randy,

A quick question.....with all these 787's being manufactured.....I was out in Seattle this past week and saw many 787's at Paine Field that looked like they were at / near completion, but they had NO ENGINES on them. The had big large 'blocks of weight' hanign off the pylons. Is there an Engine shortage issue ??

Norman Garza (Long Beach, CA):

The 737-900ER looks great in United's new livery. I have also seen pictures of United's nearly complete 787-8, the plane looks great in the colors in United inherited Continental livery and the new United typeface. The possibilities are almost limitless with the city pares that can be attained from the long-thin-route abilities and the capacity needed for them as well as high frequency long distance or supplement capacity on busy days.

Randy Tinseth:

No engine shortage Steve. Those airplanes are undergoing change work before the engines will be put on.

Eric D Anderson (Treasure Island, FL 33706):

The 787 is one fantastic aircraft! Good for United-Continental being the first U.S. carrier to fly the 787...when do Delta and American get theirs???

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