Posted by: mulrickillion | December 11, 2011

Banks withdraw from aircraft financing

By Andrew Parker, Dec 6, 2011 —

Airlines will have to make greater use of the bond markets to pay for aircraft because European banks are pulling back from commercial aircraft financing, Boeing warned on Tuesday.

Airlines are also likely to lease more aircraft rather than buy them because of the reduced availability of bank lending, Boeing Capital Corporation, the US aircraft manufacturer’s finance arm, said. . . .

BCC expects that 10 per cent – or $10bn – of the financing for the 2012 deliveries will come from airlines and lessors tapping capital markets, mainly though bond rather than equity issuance. BCC estimates only 5 per cent of financing will have come from capital markets in 2011.

Meanwhile, BCC expects commercial bank lending for aircraft purchases to shrink as a proportion of aircraft financing, from 25 per cent in 2011 to 21 per cent in 2012. The absolute amount is due to increase slightly, from $19bn in 2011 to $20bn in 2012.

Mr Zolotusky said while some European banks were pulling back from aircraft financing, others were returning, including the state-backed Development Bank of Japan. He also predicted insurance companies would emerge as significant players. . . .

Banks withdraw from aircraft financing – FT.com

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