Boeing Forecasts Healthy Commercial Plane Financing Market -- Update

Date : 07/12/2018 @ 03:17
Source : Dow Jones News
Stock : Boeing Company (The) (BA)
Quote : 325.47  0.0 (0.00%) @ 00:21
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Boeing Forecasts Healthy Commercial Plane Financing Market -- Update

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(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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