Boeing says funding is available to support aircraft deliveries
Boeing Co (BA.N) on Wednesday expressed optimism about funding jet buyers to support deliveries as the industry considers an air transport recovery, while raising an orange flag over airlines’ access to air transport. commercial bank loans.
Industry-wide financing needs to support deliveries have fallen by around 40% to $ 59 billion in 2020, with the pandemic stifling production already weakened by the Boeing 737 MAX grounding in 2019.
“Despite the unprecedented impacts of COVID-19 on the global aerospace industry, there is generally still liquidity in the market for our customers,” said Tim Myers, president of Boeing Capital, the aircraft manufacturer’s finance arm.
“We expect it to improve further as travel starts to rebound.
Aviation has emerged as a fast-growing alternative asset class over the past decade, as investors have turned to dollar-denominated investments that offer relatively high returns, particularly against a rate environment. low interest.
As the pandemic swept the industry just over a year ago, credit spreads widened, financial markets closed to aviation and banks retreated, Boeing said in a report on the aviation financing.
But “the financial markets have returned and new sources of funding from institutional investors and funds have come into the market,” he added.
A lingering concern is the availability of commercial bank financing, which typically accounts for around one-third of the financing needed to support aircraft deliveries.
Commercial lending has gained ground since 2020 but remains on Boeing’s watchlist with certain tax-related instruments. But for now, the capital of investment funds is filling the void.
“We anticipate that capital will continue to flow to the industry from established players and that new entrants will seek opportunities as the industry recovers,” Myers said.
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