Jetrader - Spring 2016 - 21

Boeing's confidence
in the financing
industry stems from
the healthy balance of
funding sources.
good spread across capital markets,
commercial banks and cash with a small
component of export credit. That sort of
diversity is terrific news for the airlines
and lessors."
And the greater participation in aircraft
financing is welcome news, too, as Boeing
forecasts demand for more than 38,000
new commercial airplanes over the next
20 years, valued at $5.6 trillion; $127 billion is required to finance deliveries in the
next 12 months alone.
"The good news there is the way the
industry is expanding and adapting to
meet the increasing delivery financing
requirements," Myers said. "In 2010,
industry financing requirements were
$62 billion and as we've seen that requirement more than double over the past six
years, we've seen the financing markets
evolve and rise to meet the challenge. We
continue to be positive about the ability
for funding sources to grow as financing
requirements increase through to about
$172 billion in 2020."
Boeing's confidence in the financing
industry stems from the healthy balance
of funding sources. As it looks at its own
deliveries for the coming year, Boeing
expects 38 percent to be funded by the
capital markets, 28 percent by commercial
banks and 24 percent by cash, with export
credit usage to continue at historic low
levels around 9 percent.
As with 2015, lessors continue to garner
attention in the aircraft financing space as
they increase their share of the financing
pie and continue to evolve business models
to enable growth.
"Leasing companies play a significant
role in supporting new commercial airplane deliveries - both through direct
purchase from manufacturers and sale
leasebacks," said Jordan Weltman, vice
president and global head of customer
finance for Boeing Capital. "The interesting thing we're seeing with this sector is
the way leasing companies are driving

Chart 2

Healthy aircraft financing environment
2009

2010

2011

2012

2013

2014

2015

2016F

Leasing Companies
Capital Markets
Commercial Banks
Export Credit Agencies
Private Equity and Hedge
Funds
Tax Equity
New Sources of Funding
Airframe and Engine
Manufacturers
SATISFACTORY

CAUTIONARY

MAJOR CONCERN

Copyright © 2016 Boeing. All rights reserved.

Funding for Boeing deliveries in 2016 mirrors that of the broader industry with a good balance across
capital markets, commercial banks and cash with historic low levels of export credit usage. (Boeing graphic)

Chart 3

Balanced funding for Boeing deliveries
Financing forecast for new Boeing commercial airplanes in 2016

Cash

Capital Markets

Bank Debt

Export Credit

Manufacturer

Lessor Financing*

25%

38%

28%
9%
2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016F

*Tracking began in 2011 for Cash, Bank Debt, and Export Credit categories
Copyright © 2016 Boeing. All rights reserved.

Lessors are expected to continue to secure the majority of their leverage from capital markets.
(Boeing graphic)

innovation throughout the aircraft financing industry; they're bringing a diversity
of new equity to the industry as well as
evolving their own business models to
allow them to free up their balance sheets
for new acquisitions."
Where leasing companies have traditionally sold off their portfolios to secondtier leasing companies, Boeing expects to

see a continuation of the trend of leasing
companies selling assets to new equity
players but retaining management of those
assets.
"A lot of the equity we've seen come
into the sector over the past 12 months
is from new participants," Weltman said.
"These organizations are attracted to aircraft financing because of the healthy
Jetrader * Spring 2016 21
Jetrader - Spring 2016

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