As the industry looks to a turnaround in air travel, Boeing Co. expressed optimism about financing jet buyers for deliveries while raising an amber flag to commercial bank loans regarding airline access.

The demand for funding to support deliveries industrywide slumped by 40% to USD 59 billion in 2020, with the pandemic hampering production, which was already affected by the grounding of the Boeing 737 MAX in 2019, sources cited.

Tim Myers, President at Boeing Capital, mentioned there is liquidity in the market for their customers, despite the unexpected implications of COVID-19 on the aerospace industry worldwide. They expect it to further enhance as travel resumes, he added.

It is worth noting that aviation is a growing alternative asset class over the last ten years, as investors moved towards dollar-denominated investments that deliver comparatively high returns, specifically when interest rates are low.

The company said that credit spreads expanded, capital markets are closed to aviation, and banks retreated as the pandemic swept through the industry last year. However, capital markets have recovered, and new sources of financing from institutional investors and funds have entered the market, it added.

Myers further added that they expect capital to come from existing players and new entrants seeking opportunities during the industry's resurgence.

For the record, commercial lending has recovered since 2020, but it, along with some tax-related instruments, is still on Boeing's radar. Although, for the time being, capital from investment funds addresses the deficiencies, sources with relevant information cited.

Credible sources cited that, in March, Boeing had its second month of positive order operation, with new jet orders offsetting a steady stream of 737 Max cancellations. During the month, the Chicago-based company received orders for 196 planes, all were 737s, and recorded 156 737 Max cancellations, including newly revealed scrubbing by Turkish Airlines of 50 737 Max.

Source Credit –

https://www.reuters.com/article/us-boeing-aircraft-financing/boeing-says-financing-available-to-back-jet-deliveries-idUSKBN2C12LB