Occasionally you see me write about aircraft financing. As an engineer by trade, it’s not an area where I spend much time. But I know that our ability to deliver products -as great as they are - is only as good as our customers’ ability to have their financing in hand at turnover time.
My colleagues at our financing and leasing unit, Boeing Capital Corporation, make sure our customers are aligned with financing for every airplane we deliver. It doesn’t hurt that they’re part of our sales team with every customer and they keep in close touch as each airplane moves through the factory to ensure dollars are in hand on delivery day.
Starting with the financial crisis that began in 2008, Boeing Capital began sharing publicly its extensive monitoring of financing conditions and related data gathered from its conversations with bankers, financiers and other sources in an annual forecast of expected aircraft financing conditions. Think of it like Boeing’s Current Market Outlook but written for a financial audience and shorter in its perspective - a year or two, as opposed to 20 years - to better fit the horizon of aircraft investors.
From the dollar to the yen, financing plays a huge role in aviation.
Last year it predicted that our industry would find sufficient delivery financing in 2012 even as the major manufacturers were increasing production to meet what we believe is a real and stable demand. Fortunately, our predictions bore out.
What about the year ahead? According to our latest finance market outlook released this week, the global commercial aircraft builders in 2013 are expected to produce a record level of new airplanes, somewhere north of $100 billion. At the same time, we know that new global bank regulations taking effect will put more requirements on lenders which will affect borrowers. Also, airlines eligible for export credit financing— whether associated with sales by us or our competitors— will see higher prices for accessing those loan guarantees made by countries to benefit customers of their exporters.
Despite these challenges, BCC forecasts that airlines will be able to attract sufficient funding for deliveries in 2013. It really speaks to the health of aviation globally.