Aircraft maker, Boeing, expects the worldwide market for commercial aircraft financing to remain strong as airlines continue to receive expected record levels of deliveries of new, fuel-efficient airplanes in 2014.
Boeing provided the positive aircraft funding update at its ninth annual regional airline planning seminar for financiers concluded last week in Istanbul, Turkey.
This year’s seminar attracted 30 financing executives from regional commercial banks, investment firms, leasing companies and customer airlines from throughout the Middle East, Europe, Africa and Central Asia.
The week-long program is a more convenient regional version of the manufacturer’s long-running Seattle-based educational program for financiers.
This year, Boeing was joined by executives from Turkish Airlines in the education process on how airlines determine their airplane fleet needs and finance them.
“Globally the liquidity balance looks good as the commercial aviation industry rebalances itself to move away from export credit support, due in part to its increased pricing, and more toward reliance on the commercial markets,” said Ron Glover, regional managing director for Aircraft Financial Services at Boeing Capital Corp., the aircraft builder’s financing and leasing unit and host of the event.
Boeing said worldwide the major aircraft manufacturers are expected to deliver roughly $112bn in new jetliners by year end to operators, creating opportunities for new entrants looking to invest in large aircraft.
“With record production rates continuing in response to genuine demand driven by higher fuel prices, timing couldn’t be better for investors wanting to enter the aviation space and benefit from its financial rewards,” Glover said.
Boeing noted that the industry is seeing a rare balance among the primary sources for new aircraft funding – aircraft leasing companies, commercial banks, the capital markets and export credit agency (ECA) support among them.
In addition, the current healthy aircraft financing market encompasses both well-known funding sources along with smaller regional commercial institutions, many entering aircraft financing for the first time.
Boeing noted growth by investors in Japan, Russia, China and Latin America and called particular attention to progress in the Middle East, as the region fulfills its potential as an emerging aircraft investment center.
“In the Middle East in 2013, 65% of Boeing’s deliveries were financed by local Middle East banks,” said Glover. “This is a significant increase over the last few years and a clear indicator that the region’s financiers thoroughly grasp the great investment opportunities associated with our commercial airplanes.”
The company’s latest market outlook reports Middle East airline industry growth is expected to continue over the next 20 years. The 2013 outlook edition pegged the Middle East market at $550bn over the next two decades, which translates into an expected need for 2,850 commercial jets.
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