Boeing Prepares To Re-Launch Aircraft Financing Arm | Aero-News Network
Aero-News Network
RSS icon RSS feed
podcast icon MP3 podcast
Subscribe Aero-News e-mail Newsletter Subscribe

Airborne Unlimited -- Most Recent Daily Episodes

Episode Date

Airborne-Monday

Airborne-Tuesday

Airborne-Wednesday Airborne-Thursday

Airborne-Friday

Airborne On YouTube

Airborne-Unlimited-04.22.24

Airborne-Unlimited-04.16.24

Airborne-FlightTraining-04.17.24 Airborne-AffordableFlyers-04.18.24

Airborne-Unlimited-04.19.24

Join Us At 0900ET, Friday, 4/10, for the LIVE Morning Brief.
Watch It LIVE at
www.airborne-live.net

Fri, Oct 24, 2008

Boeing Prepares To Re-Launch Aircraft Financing Arm

Shores Up Reserves To Help Airlines Continuing Buying Planes

Hoping to hold onto existing record aircraft orders, Boeing plans to ramp up its aircraft financing program in the face of frozen investment markets and a slumping global economy.

The Chicago Tribune reports Boeing CEO Jim McNerney told analysts Wednesday the planemaker has moved $9.5 billion in funds to its Boeing Capital Corp. operation, to shore up so-called "backstop" financing typically used until airlines can secure primary loans from banks or aircraft lessors.

Reflecting the current economic crisis, Boeing Capital is also taking steps towards once-again expanding into a full-fledged aircraft financing operation, to be used as a last resort for customers that can't secure primary funding from the credit market.

Boeing had devoted its efforts over the past several years towards ramping down that operation, due to the relative strength of outside capital markets.

"It's very likely that Boeing Capital will do some new financing in 2009," said Boeing CFO James Bell in a conference call announcing the company's third quarter financial results. As ANN reported Wednesday, Boeing posted Q3 2008 income of $695 million, with earnings falling 38 percent over Q3 2007.

Most of that plunge came from the effects of the ongoing strike by the International Association of Machinists, which has halted deliveries of (and customers' final payments for) Boeing airliners. But Boeing also sees a probable dropoff in its future business due to the economic crisis, as well as possible mass cancellations of existing orders.

Establishing a dedicated credit arm carries significant risks for Boeing, should the airlines receiving financing go out of business. The airline also runs the risk of losing money should airlines return their planes beforehand, or push for more favorable financing terms; Midwest Airlines recently did both, as ANN reported.

Though Boeing retains ownership of the aircraft financed through Boeing Capital until the airlines' chits are paid off, even carriers in default hold significant influence when the aircraft lender is also the manufacturer... and doesn't want the hassle of reselling those airplanes.

That's why analysts expect Boeing to be very selective in choosing which airlines will be allowed credit. "It will be for their best customers," said Michael Derchin, airline and aerospace analyst for FTN Midwest Securities. "It's not for everybody."

US customers account for 71 percent of Boeing Capital's current portfolio. AirTran Airways is the lender's largest customer, with $1.46 billion in secured debt against its fleet of Boeing 717s and 737s.

FMI: www.boeing.com

Advertisement

More News

Airbus Racer Helicopter Demonstrator First Flight Part of Clean Sky 2 Initiative

Airbus Racer Demonstrator Makes Inaugural Flight Airbus Helicopters' ambitious Racer demonstrator has achieved its inaugural flight as part of the Clean Sky 2 initiative, a corners>[...]

Diamond's Electric DA40 Finds Fans at Dübendorf

A little Bit Quieter, Said Testers, But in the End it's Still a DA40 Diamond Aircraft recently completed a little pilot project with Lufthansa Aviation Training, putting a pair of >[...]

ANN's Daily Aero-Term (04.23.24): Line Up And Wait (LUAW)

Line Up And Wait (LUAW) Used by ATC to inform a pilot to taxi onto the departure runway to line up and wait. It is not authorization for takeoff. It is used when takeoff clearance >[...]

NTSB Final Report: Extra Flugzeugbau GMBH EA300/L

Contributing To The Accident Was The Pilot’s Use Of Methamphetamine... Analysis: The pilot departed on a local flight to perform low-altitude maneuvers in a nearby desert val>[...]

Classic Aero-TV: 'Never Give Up' - Advice From Two of FedEx's Female Captains

From 2015 (YouTube Version): Overcoming Obstacles To Achieve Their Dreams… At EAA AirVenture 2015, FedEx arrived with one of their Airbus freight-hauling aircraft and placed>[...]

blog comments powered by Disqus



Advertisement

Advertisement

Podcasts

Advertisement

© 2007 - 2024 Web Development & Design by Pauli Systems, LC