Boeing: Export Credits Waning As Aircraft Funding Source

More commercial jet buyers will tap rapidly-expanding capital markets to finance $112 billion of jet sales in 2014 as state-backed export credits become pricier and more politically sensitive, Boeing Co (NYSE:BA) said on Tuesday.

Money from government-backed export credit agencies (ECA), once used to pay for the bulk of jet deals, will make up 18 percent of plane financing next year, down from 23 percent in 2013, the U.S. aircraft maker said in an annual forecast.

"Higher fees and higher equity requirements are driving more customers to other markets ...(and) export credit has a higher - than what we've seen historically - political component to it," said Kostya Zolotusky, managing director of capital markets development and leasing at Boeing Capital Corp.

Zolotusky said jetliner deliveries were expected to total $112 billion in 2014, up 7.7 percent from this year, with 95 percent of that split between Boeing and its European rival Airbus <EAD.PA>.

Airbus and Boeing this month looked set for a photo finish in their annual order race this year, although Boeing remained ahead on deliveries, which drive revenue and are the most widely used benchmark for ranking the top two jetmakers.

Boeing said capital markets, where aircraft buyers finance the purchases through means such as bonds using jets as collateral, would make up 22 percent of financing in 2014, up from 14 percent this year and just 3 percent in 2009.

Zolotusky pointed to growing opposition to state involvement in the private sector from political groups such as the conservative U.S. Tea Party movement as one reason for the decline in popularity of export credits.

He said there were also complaints from British, French, German and Spanish airlines who are not able to access export credits like their rivals.

Airlines that have recently turned to capital markets for funds to buy planes include Air Canada <ACb.TO> and Virgin Australia <VAH.AX>. British Airways <ICAG.L> was the first UK airline to use new planes as collateral when it launched a $927 million asset-backed bond in June.