Boeing last week released its annual Commercial Aircraft Finance Market Outlook (CAFMO) report, which includes key results for 2022 and a projection for 2023.
The American manufacturer noted that the industry continued to recover and expects activity to be fully restored by 2023 or 2024. In addition, it said the sector will show “resilience” this year, when financing would reach levels close to those of 2019.
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Boeing unveiled CAFMO 2023
The report presented Boeing’s assessments of near-term market dynamics. According to its data, the company expects another year of recovery and increased demand from financiers and investors.
“With production and delivery increases and the reopening of certain regional markets, we forecast aircraft financing needs to reach near pre-pandemic levels in 2023”, said Rich Hammond, the company’s VP of Customer Finance.
Hammond added: “This positive trend reaffirms that our industry’s fundamentals are strong and aircraft financiers and investors are well positioned as travel continues to recove”.
Main points of the report
- Most of the aircraft purchased from Boeing in 2022 were financed with cash as a result of strong operating results and customers’ efforts to reduce their indebtedness, according to the manufacturer.
- Looking ahead to 2023, the company expects cash financing to continue to play an important role in aircraft delivery processes. However, it projects that the use of capital markets, bank debt and export credits will increase.
- In this context, lessor-backed deliveries would remain stable for the foreseeable future, although they may face competition from other sources of financing.
- Capital markets activity in 2022 was lower compared to the activity recorded in the previous year.
- Export credit agencies supported about 5% of the manufacturer’s deliveries.
- Lessors remain a key part of the overall financing ecosystem, supporting almost half of the global fleet.
- North American customers opted mostly for cash financing, due to their strong cash position and good operating results.
- While deliveries to Asia-Pacific customers were low, most companies had easy access to bank debt and cash resources. Deliveries in China were limited to lessors and freight models; they were mainly financed through domestic banks.
- European customers also opted to use more cash, even though the region traditionally has the most balanced mix of funding sources.
- Financing of deliveries in the Middle East was balanced between cash, sales agreements, lease-back and bank debt.
- Latin American customers mainly used sale and lease-back arrangements for their deliveries. Some relied on export credits and commercial debt.
- Deliveries to African customers were mostly self-financed, although sale and lease-back agreements were also concluded.
See also: Airbus and Boeing seek Indian workforce to speed up deliveries
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