Jetrader - Spring 2015 - 22

from virtually nothing to the point where
leasing companies owned more than
40 percent of the world's commercial airplane fleet in 2014. Boeing expects that
growth to continue, with lessors owning
around half of the world fleet by 2020.
In 2015, lessors are expected to be
responsible for funding the largest share
of new airplane deliveries - through a mix
of both sale-leaseback and direct purchases from manufacturers. And as their
market participation has grown, lessors
have driven innovation within the aircraft
financing sector.
"Over the past three years, leasing
companies have shifted the bulk of their
leverage from commercial banks to more
efficient capital market funding," explained
Zolotusky. "This expanded capital market
liquidity is attracting new institutional
investors and stimulating interest in the
creation and evolution of aircraft portfolio
securitization structures."

Boeing forecasts strong demand for new
commercial airplanes in 2015, resulting in
about $124 billion in commercial aircraft
deliveries industry-wide - double the amount
from 2010.

Robust and Growing Capital
Markets Participation

Balanced Global Debt Market

Capital markets are again expected to
account for the largest share of new aircraft
delivery financing in 2015. An expanding
investor base, a healthy balance between
secured and unsecured funding, innovative financing structures, and a growing
private placement market continue to
drive the growth of capital markets in aircraft finance.

According to Boeing, in 2015 the capital
markets are expected to support nearly
a third of new deliveries through both
secured and unsecured funding. Capital
markets are projected to the primary source
of leverage for lessors, who are a conduit
to the public markets for many airlines.
For new deliveries, global airlines will rely
on both secured and unsecured issuances,
with lessors primarily using unsecured
structures. Boeing also expects refinancing activity to remain strong, with a variety of secured structures for both airlines
and lessors.

While capital markets are expected to
fund the most airplane deliveries in 2015,
Boeing projects that commercial bank
debt will remain the second-largest source
of funding.
The rise of new participants in the
commercial banking sector over the past
year drove a change in the way Boeing
depicts the global aircraft debt markets
in its forecast. Over the past few years,

Lessors have shifted the bulk of their leverage over the past few years from commercial banks to
capital markets.
22 The official publication of the International Society of Transport Aircraft Trading

the company has highlighted commercial bank debt financing originating in
China, Germany, Japan and France, with
the Middle East, Americas and Asia
Pacific grouped as "other." The 2015
forecast breaks out the United States and
Australia, with banks from those countries
projected to be responsible for 9 percent
and 8 percent of commercial bank debt
financing, respectively.
This rise in new participants, along with
the continued participation of existing
lenders, should help maintain balance,
diversity and strength in the commercial
bank market for 2015. Boeing notes that
first-tier airlines and lessors should continue to be the beneficiaries of robust
competition among banks, boosting
demand for aircraft leasing among secondtier carriers.

Export Credit Usage Declining
Export credit continues to play a vital
role in filling gaps where commercial
funding is unavailable, and in addressing
customer needs in emerging markets and
those with high political risk. However,
the strength of the capital markets and
commercial bank activity is expected to
keep export credit usage at historically
low levels in 2015.
"We expect to see export credit usage
this year limited to emerging market players and new lessor platforms with a modest amount needed for diversification by
established carriers," Zolotusky said.
Boeing's Current Aircraft Finance Market
Outlook provides an assessment of the
current state of the aircraft financing
market, a forecast of new airplane financing for the coming year, and a project
of industry delivery financing requirements for the coming five years. The
2015 forecast is the seventh undertaken
by Boeing Capital.
Editor's Note: Thanks to Boeing for supplying
editorial content for this story.

Jetrader - Spring 2015

Table of Contents for the Digital Edition of Jetrader - Spring 2015