Jetrader - January/February 2013 - 9

2013

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Dollars to follow demand
Aircraft ﬁnancing environment – Aviation
ﬁnancing markets in 2013 should see reasonable liquidity and pricing, according to Boeing’s latest annual market outlook for commercial aircraft released in early December 2012. Uncertainties linger around some market sectors, in particular export credit funding, as borrowers face next global regulations and expected higher pricing beginning in 2013. (Source: Boeing)

exaggerated. Our view was that Europe would ﬁnd a way to muddle through their predicament, which is what happened,” Zolotusky said. “Even though this challenge will still keep pressure on the European banks, we believe they won’t exit the space because aircraft are some of the most lucrative assets they’re ﬁnancing.” However, Boeing said commercial banks are facing real challenges as a result of higher capital requirements associated with Basel III banking regulations, and bank borrowers will continue to see more expensive and restrictive debt. “They may be doing a lot less of export credit ﬁnancing, but they are still where industry needs them, in the commercial asset-secured lending arena,” said Zolotusky. Rise of Regional Banks – The fact that the commercial banking didn’t disappoint aviation this year leads Boeing to expect that the sector’s 2013 contribution should actually be higher than at the end of 2011. “Part of that is because of the strengths of the traditional bank aircraft ﬁnanciers, like the French and German banks. And part is because of new entrants, like the returning Chinese banks, which took a pause for a while, and the banks in Japan, Australia, the Middle East and even the some of the U.S., all of whom are returning to support deliveries primarily in their regional markets,” Zolotusky said. Demand is the Driver –The manufacturer expects global air travel to continue to demonstrate “remarkable resilience”, in Boeing’s words, once again in 2013. Both major manufacturers are pursuing production-rate increases as product demand remains high and order books are bulging. Zolotusky said industry data driving the manufacturers’ plans and forecasts clearly support higher deliveries. “If anything, we’d call it a tight market,” said Zolotusky. “Aircraft utilization is at record highs. Load factors globally are at record highs. Demand growth, meaning growth in people

Industry aircraft delivery ﬁnancing outlook – As announced in
Boeing’s ﬁfth-annual Current Aircraft Financing Market Outlook, the U.S. airframer and Airbus in 2013 are expected to split the lion’s share of a total global market for new commercial aircraft estimated at more than $100 billion. Over the next ﬁve years, continued demand for new jetliners of all sizes is forecasted to reach more than $132 billion annually or roughly double the industry’s delivery rate when Boeing’s forecasting began in 2008. (Source: Boeing)

Secondary market ﬁnancing requirements –
For the ﬁrst time this year, Boeing’s annual global aviation ﬁnancing forecast includes an expected need in 2013 for approximately $11 billion of capital by airlines and lessors for reﬁnancing for used equipment. In 2012, operator-issued securities that included both new and used equipment helped contribute to an increasingly active capital markets environment for aircraft ﬁnancing. (Source: Boeing)

Jetrader 9

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Jetrader - January/February 2013

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