Worldwide Deliveries Compensate For US Slump

There was a time when weakness in the US financial industry would have meant a downturn in aircraft sales worldwide. Now, as US lenders pull back and lick their sub-prime mortgage wounds, financiers in other nations are stepping in.

Kostya Zolotusky, director of capital markets development for Boeing Capital, tells Dow Jones aircraft financing conditions worldwide remain strong, even as US capital markets and private-equity firms sit on the sidelines.

Zolotusky says investments from US hedge funds and capital markets now account for only about five percent of the global aircraft lending market, with wealthy banks and sovereign funds in China and the Middle East picking up new business which once went to US interests.

He adds European banks are still lending on aircraft, and providing financing at favorable costs, in line with historical rates at about six-to-seven percent.

As a result, he says, backlogs at Boeing and Airbus remain strong, thanks to growing air travel in emerging markets and demand from established airlines for more modern, fuel-efficient fleets. Strong aircraft resale value and increasing global uniformity in the terms under which aircraft are bought and leased are said to be making aircraft attractive investments.

Zolotusky adds Boeing itself is prepared to finance aircraft purchases for customers, but so far has seen no need to do direct financing. "We've looked at the aircraft orders we have on the books through 2010... we don't see any sales where we would have to step in."

FMI: www.boeing.com