A few years ago the Boeing backlog was valued at $441B. That may be a tough nut to finance by your local savings and loan.
“A few years ago the Boeing backlog was valued at $441B. That may be a tough nut to finance by your local savings and loan.”
Boeing does not rely on the Import/Export Bank to fund 100% of its sales. Currently 15% of Boeing’s sales are funded by the Import/Export Bank. Plus the $441 billion backlog is spread over 7-8 years.
From 2007 to 2014, $40.5 billion of Import Export Bank financing went to airlines (slightly less than $6 billion per year). Of this amount $19.5 billion nearly half (48%) went to government controlled foreign airlines such as Air China.
82% of total Import/Export Bank lending goes to Boeing.
Boeing’s public report on the outlook for aircraft financing states: “Funding for Boeing deliveries in 2015 is expected to mirror that of the broader industry, with unprecedented liquidity driving strength and diversity in major sources of financing. Continued deleveraging and resilient airline profitability are expected to support relatively high levels of cash equity, with funding for 2015deliveries projected to be roughly balanced between cash, commercial bank debt, and capital markets. Reflecting the current strength of commercial markets, export credit usage should be at historically low levels. As with the broader industry, lessors are expected to play a significant role in supporting Boeing deliveries.”
The private sector global aircraft finance market is not suffering from a lack of liquidity. The facts suggest the Import Export bank is financing the “high risk” and foreign government segment of Boeing’s business the private sector is unwilling to finance at below market rates. Non unlike the government guarantees of subprime mortgage loans ten years ago.
Effectively the Import/Export bank is a vehicle for subsidizing the Boeing’s sales of aircraft outside the US. Pure corporate welfare.