Boeing Co. – which has posted several significant high-volume orders for new aircraft during the first quarter of 2023 – issued a new outlook report for commercial-aircraft financing, predicting continued recovery from the decline that began in 2020 as a result of the global pandemic.
"With production and delivery increases and the reopening of certain regional markets, we forecast aircraft financing needs to reach near pre-pandemic levels in 2023," stated Rich Hammond, Boeing’s vice president of Customer Finance. "This positive trend reaffirms that our industry's fundamentals are strong and aircraft financiers and investors are well positioned as travel continues to recover."
The Covid-19 pandemic disrupted what had been a booming market for new commercial aircraft, with hundreds of orders cancelled for Boeing and other suppliers during the 2020 and 2021. Demand began to recover in 2022, as Boeing notes in its 2023 Commercial Aircraft Finance Market Outlook (CAFMO.)
In the CAFMO report, Boeing noted that In 2022 the majority of new aircraft it delivered were funded with cash, “due to strong operational performance and de-leveraging efforts by customers.” It added that now customers are financing their purchases from capital markets, bank debt, and export credit, though cash funding will continue to have a significant role.
Deliveries backed by aircraft-leasing groups will remain stable in 2023, though Boeing indicated that other funding sources may begin to offer an alternative for carriers.
As for new aircraft orders, in the Commercial Market Outlook issued last summer Boeing projected a 20-year (2022-2041) market with a total value of $7.2 trillion for new airplane deliveries, and a global commercial-aircraft fleet increasing by 80% through 2041, compared to 2019.
Boeing reiterated a point it made in the CMO report last year, that demand for domestic air travel has recovered well in several parts of the world, and international travel is gaining momentum as travel restrictions are relaxed.
The OEM forecasts that international air travel will return to pre-pandemic levels by 2023-2024, which will justify continued demand for new aircraft.