Boeing: Capital Markets Will Provide More Financing in 2014

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The Boeing Company (NYSE:BA) released its annual forecast Tuesday and said that commercial jet buyers will look to capital markets to provide more financing in 2014, as the value of jet sales is rising by about 7.7 percent and they need to fund an anticipated $112 billion in jet deliveries next year. While capital markets accounted for just 3 percent of total jet financing in 2009, that number rose to 14 percent this year, and will jump to 22 percent in 2014.

According to Bloomberg, Kostya Zolotusky, managing director of Boeing Capital Corp., confirmed in London Tuesday that capital markets will provide 14 percent of the $104 billion in required financing this year. When that figure rises to 22 percent in 2014, capital markets will turn to bank debt and cash as the primary vehicle for payments, rather than the current system of employing state-backed export credit.

Reuters explains that these markets are helping compensate for the sector’s diminishing reliance on export credit because capital markets have been able to expand significantly thanks to the Cape Town Treaty that promotes investor interest in non-U.S. airlines. Export credit will only finance 18 percent of sales in 2014, while this year it accounts for 23 percent. Zolotusky explains that, “We have had a number of deals by non-U.S. airlines in the capital markets to finance new deliveries. The leasing companies have also started very actively tapping capital markets.”

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