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ECA supported aircraft sales to move from 20% to 50%

(ECA Watch, Ottawa, 29 June 2009) In the wake of the Paris air show, a large number of articles have appeared this month highlighting the role of ECAs in the financing of commercial aircraft sales. We summarize and link a number of them here.

Airbus Customers Need More Financing, Leahy Says (Bloomberg) -- Airbus, the world’s biggest maker of commercial aircraft, has had more customers ask for help financing aircraft as banks tighten lending. “We are going to add some financing,” Chief Operating Officer John Leahy said in an interview at the International Air Transport Association annual meeting in Kuala Lumpur today. Export credit agencies will finance about 50 percent of Airbus deliveries next year, up from 40 percent this year, he added.

Airbus updates the market Leahy conceded that financing production was a “problem” given the current climate. “But we are getting support from export credit agencies,” he said. “Last year 20% was financed by export credit agencies – this year it´s 50% - and we are increasing the money we are putting into financing.”

Paris air show: Upbeat financing outlook could falter Financiers and manufacturers are bullish about the state of aircraft financing, no doubt, due to recent aircraft order adjustments. However, this sentiment could prove short-lived. Complicating matters is the fact that the aviation industry will call for capital above and beyond this year's estimated $68 billion financing requirement for new aircraft - a concern not reflected in any funding gap calculations. There is also worry that export credit support, which has been gold dust for many, is creating an unlevel playing field that could threaten second-tier credit airlines.

Paris Air Show News "What counts for. . .our financial health is not orders but turning our backlog into delivery," [Airbus CEO] Enders said, pointing out that the manufacturer has a healthy backlog of some 3,500 aircraft. To help secure deliveries, he conceded that government export credit agencies in France, Germany, Spain and the UK have stepped up their efforts and are participating in about 40% of Airbus deliveries this year compared with about 20% last year.

ILFC May Buy From Companies Other Than Airbus, Boeing International Lease Finance Corp., the world’s biggest aircraft lessor, is considering buying jets from planemakers other than Boeing Co. and Airbus SAS for the first time in the company’s 36-year history. ILFC is evaluating new-model regional planes including Bombardier Inc.’s 130-seat CSeries and Tokyo-based Mitsubishi Heavy Industries Ltd.’s 96-seat aircraft,

Boeing, Airbus challenge Bombardier CSeries classification Bombardier Inc. has drawn fire from the two global giants of the aerospace industry over its attempts to have its new CSeries jetliner placed in a category that would allow for more flexibility in export credit financing

Airbus ECA Support May Change In addition to trying to sort out A350 launch aid for the A350 twin-widebody, Airbus is in talks with the governments of France, Germany, the U.K. and Spain to adjust how their respective export credit agencies (ECAs) support aircraft delivery financing to airlines. Unlike Boeing, which relies singly on the Export Import Bank, Airbus has to work with different ECAs to receive the same financing support from France, Germany and the U.K. Spain, so far, was not participating in the program, but Airbus chief executive Tom Enders says that’s currently being evaluated.

‘Swine’ Bankers Shun Jet Loans, Leave $36 Billion Gap June 19 (Bloomberg) -- The biggest threat to the global airline industry isn’t the swine flu outbreak, according to AirAsia Bhd.’s Tony Fernandes. “We’ve been through SARS, bird flu, tsunami, you name it,” Fernandes, the founder and chief executive officer of Southeast Asia’s biggest discount carrier, said at the Paris Air Show this week. “The only swine now are bankers.”

Airbus, Boeing Hope to Convince Suppliers of Their Build Forecasts At the heart of the uncertainty that permeates this year's Paris air show is the question of whether the immense order backlogs held by the two aerospace monoliths are durable enough to keep the Boeing 737- and Airbus A320-family production lines busy until the global airline industry rebounds from a massive slump... To help sustain deliveries, Airbus and Boeing are relying on export credit agencies to help airlines finance aircraft. Airbus has seen export credit agency support increase to approximately 40% of deliveries this year, with Boeing reporting about the same.