9-Dec-2015 1:05 PM

Boeing Capital Corporation forecasts healthy aircraft financing market of USD127bn in 2016

Boeing Capital Corporation (BCC) released (08-Dec-2015) its Current Aircraft Finance Market Outlook 2016. The updated outlook forecasts continued strength in the primary aircraft finance sectors, with a growing number of market participants and a steady trend toward more funding options at attractive pricing for buyers of commercial aircraft. Highlights include:

  • The aircraft finance outlook for 2016 is positive. BCC expects the industry to continue developing new markets and structures, enabling broader financier and investor participation in aviation, and resulting in greater efficiency for airlines and lessors. BCC believes the aircraft finance industry is well-positioned for another successful year, underpinned by strong commercial aviation industry fundamentals and bolstered by interest from both new and experienced financiers and investors;
  • In particular, BCC forecasts increasing momentum behind lessor portfolio sell-down into the capital markets and the development of regional private placement markets. Standardizing these structures to enable their usage by a broader set of borrowers,  financiers, and investors should be an important area of focus for all market participants;
  • USD127 billion is projected in financing new commercial aircraft deliveries in 2016, with the capital markets and commercial banks accounting for approximately two-thirds of that total;
  • Aircraft lessors are expected to support around 40% of new airplane deliveries;
  • The depth and breadth of commercial market liquidity should continue the trend of historically low usage of export credit;
  • Annual aircraft demand will increase 35-40% over the next decade. driven largely by healthy aviation industry fundamentals and balanced supply and demand for commercial aircraft. Air traffic is growing above long-term trends, airplane utilization and load factors continue to rise, replacement demand remains strong, and global airlines are producing record operating results and profits. The air cargo recovery slowed in 2015 with a decline in world trade growth. However, the long-term outlook for air cargo demand remains strong due to faster growth among developed economies and the expanding networks of sixth freedom carriers;
  • There is some market sentiment on a potential imbalance between capacity and demand, but BCC data shows a tight aircraft supply market, with planned delivery rates as a share of the installed fleet are in line with historical norms. [more - original PR]

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