Boeing Forecasts Healthy Commercial Plane Financing Market -- Update
07 December 2018 - 03:17AM
Dow Jones News
(Adds further comments from Boeing)
By Robert Wall
LONDON--Boeing Co. (BA) forecasts that aircraft delivery
financing needs for planes seating 90 passengers or more will rise
to $143 billion next year and grow further in subsequent years amid
buoyant demand for new jetliners.
Plane delivery financing, which is expected to total $126
billion this year, should grow to $181 billion in 2023, the plane
maker said Thursday.
Financing for 90-passenger-plus planes is healthy, with a
"historic low cost of capital for commercial aircraft," said Rich
Hammond, vice president for customer finance at Boeing Capital
Corp., and demand for financing will grow against a backdrop of
continued "strong demand for new airplanes."
The first-ever crash of a Boeing 737 MAX 8 jetliner on Oct. 29,
which killed all 189 people on board the Lion Air flight, doesn't
appear to have dented appetite to finance the jetliner.
Every time a MAX delivery is due "we have funding for it," Mr.
Hammond said, noting that the plane's features, including more fuel
efficiency, make it a popular choice.
Trade tensions between the U.S. and China also haven't dampened
demand for planes or financing, he said.
"I think we will see robust demand in that region for quite some
time," Mr. Hammond said, referring to China, and adding that Boeing
is working with both the U.S. and Chinese governments to assure
plane deliveries aren't hit.
For plane deliveries next year, Boeing says bank debt will
represent the biggest source of funding. Bank debt will finance
almost $50 billion in plane deliveries this year, Boeing said, and
then top that figure in 2019.
Boeing is also hoping that the U.S. Export-Import bank will be
able to provide increased plane financing. The U.S. government
bank, known as ExIm, has lately been limited to loans of no more
than $10 million because of shortage of top officials that require
confirmation by the U.S. Senate.
"We would like to see ExIm come back on line, hopefully soon,"
Mr. Hammond said.
Boeing may have to secure more financing if ExIm remains limited
in its capacity to support deliveries, he said.
The U.S. plane maker has reached out to overseas government
lending organizations, such as U.K. Export Finance--Britain's
export credit agency--to help finance plane deliveries. The U.K.
can support financing based on the British content present in
Boeing planes.
Mr. Hammond said the company is in talks with other institutions
overseas to tap similar financing.
Write to Robert Wall to robert.wall@wsj.com
(END) Dow Jones Newswires
December 06, 2018 11:02 ET (16:02 GMT)
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