Current market offers promise to willing investors: Boeing
Aircraft maker Boeing said market conditions are challenging the availability of aircraft financing but the conditions are creating opportunities for willing investors.
“The fact that there are fewer banks working in today's market also means less competition for those who have capital available. Interested investors can use the market dislocation to their advantage to enhance the returns of their longer-term aircraft portfolios,” said John Matthews, managing director for the Middle East and Africa at Boeing Capital, the company's aircraft financing division.
He said that Boeing's current forecast indicates that financing funding sources should be sufficient for 2009 aircraft deliveries.
“Some airlines are clearly challenged in their efforts to secure financing, but deals are getting done. The current crisis has been described as more one of confidence than of liquidity, and we agree,” he said.
In its current 20-year market outlook, Boeing increased its forecast for airline industry growth in the Middle East by 40% as a result of recent orders and the emergence of low-cost carriers in the region. The Middle East market is valued at $260bn in the next two decades, which translates into an expected need for 1,580 commercial jets.
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Boeing Capital actively encourages the region's emergence as an increasingly important source for aircraft financing. The company annually holds one of its four airline financier and investor conferences in the region and hosts ongoing roundtable discussions between Middle East airlines and regional banks.
“The rapidly developing financial markets in the Gulf are becoming important centres for aircraft finance. We and the region's financiers realise that there are significant opportunities here to invest in the long-term and very mobile assets that aircraft represent,” Matthews said.
He said Boeing continues to work with the region's investors to make them more comfortable with airplanes as an investment class. “We also believe that aircraft are ideal for Islamic financing since a fundamental criterion is that such investments be asset based.”