By Marietta Cauchi
Boeing Co. (BA) on Tuesday said that there had been a massive
diversification in the aircraft financing markets and there would
be enough funding at reasonable prices to finance bulging order
books as airlines worldwide look to replace fleets with new
fuel-efficient planes.
Boeing and its French rival manufacturer Airbus, unit of
European Aeronautic Defence & Space Co. (EAD.FR), will deliver
new aircraft worth a total $112 billion in 2014. The U.S. giant
said bank debt will continue to account for the largest proportion
of aircraft finance in 2014 but that capital markets will grow
their share significantly, to 22% from 14% this year, as export
credit financing declines in importance.
"I am seeing more diversity in lenders than ever," said Kostya
Zolotusky, managing director of capital markets development and
leasing at Boeing Capital Corp., the company's financing and
leasing unit. "There is an almost even balance among the primary
financing sources including aircraft leasing companies, commercial
banks in China and Japan, Germany and France, the capital markets
and export credit agencies."
Mr. Zolotusky said increased capital market activity included
more direct purchases by lessors and the increase in international
enhanced equipment trust certificates, or EETCs, such as those
issued by International Consolidated Airlines Group, Virgin
Australia and Air Canada. Private equity and hedge funds are also
investing in airline financing deals, he said.
Rising interest rates were not a worry, Mr. Zolotusky said.
"Airline financing is more correlated to GDP and the demand for new
aircraft."
Write to Marietta Cauchi at marietta.cauchi@wsj.com
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