Commercial Aircraft Finance Market Outlook 2025 H1 UPDATE

With a higher gross level of deliveries compared to H1 2024, we have seen some subtle changes in financing trends during the first half of this year compared to the preceding year, with our health check reflecting a broadly positive financing status quo for our airline customers. Regional discrepancies in availability of financing sources are, however, still evident and are ostensibly underpinned by credit quality differentiators; this marker is consistently the single most prominent selection criteria for the majority of international financiers.

We continue to observe a highly competitive new aircraft delivery financing market and that has often resulted in pricing dislocation in a number of transactions. That status will be closely watched in relation to new aircraft delivery flow, particularly in relation to wide-body aircraft, which is likely to impact price setting into ’26 and ’27.

The strengthening of rule of law standards by certain countries, which affords a more benign financing environment, is enabling a “risk-on” approach by those international financiers seeking to grow their new customer base. That is a welcome development that ensures that airlines are offered the broadest range of financing solutions for their aircraft deliveries. We recognize that this is an on-going process that requires continued cross-industry support.

In summary, we see a funding market that is showing adequate depth and appetite for new aircraft delivery financing. There is, though, a need to be vigilant to the wider macro-economic changes and to continue to reinforce the legal “level playing fields” that enable financiers to successfully transact on a global basis under their risk and reward models. As delivery volumes continue to recover, more capital will be needed for our customers and that will require all financing tools being fully available on a global basis, as well as new product development that can support these higher transaction volumes.

Industry Delivery Funding
Boeing Delivery Funding

Financial Product Distribution

Our assessment of each liquidity source is based on a medium- and long-term performance view. We have added a new feature of positive watch, based on observations of the core dynamics that underpin the specific rating of the funding source. Any uplift in our rating would be based on further evidence of successful deal executions over a number of months, alongside a strengthening in portfolio appetite/diversification. Our BCA CF teams will be delighted to discuss these considerations during our on-going outreach program to ensure we share our thoughts.

Leasing

Satisfactory

Availability of delivery financing provided by lessors remains ample across a wide spectrum of assets, credits and jurisdictions, with robust competition driving favorable economics for airlines. Product innovation continues to expand beyond operating and finance leases, with an interest in advance payment financing expected to further develop. Lessors’ competitiveness is enabled by access to capital markets, along with bank financing, to support purchase of aircraft in new and secondary markets.

Capital Markets

Satisfactory/Cautionary

An interesting dynamic in this market shaped by macro-economic and policy events, which has somewhat subdued issuance of both secured and unsecured capital markets transactions in H1 2025. Distinctly, the ABS market, has been more robust compared to the prior year and is likely to outpace results from 2024.

Commercial Banks

Cautionary

Commercial banks continued to operate in the lessor market as well as supporting core airline relationships with multi-product solutions including debt and capital market origination. We are pleased to see a number of international and regional banks adding further funding capacity in H1 2025.

Export Credit Agencies

Satisfactory

Export credit continues to be active with a healthy pipeline and we expect to see ongoing positive interest for this product.

Institutional Investors and Funds

Satisfactory/Cautionary

Investors continued to demonstrate appetite for the sector, but relative value considerations play an important part in transaction selection.

Tax Equity

Cautionary with a Positive Outlook

Japanese, French and other tax equity transactions remained an efficient and reliable source of capital, however, this continues to be a very credit-sensitive market. We have, however, observed increasing appetite and liquidity depth for new financing opportunities and as such have added a positive watch marker to establish if a sustained trend is seen and a rating upgrade is therefore merited.

Credit Enhanced

Satisfactory/Cautionary

Commercial non-payment insurance offers a valuable alternative to the financing market to enhance the credit of loan transactions, whether based on credit risk arbitrage or risk- adjusted returns. We have seen additional activity from this funding source with a number of deal successes registered in the first half of this year through existing providers, including some break-through transactions in new markets.

Airframe and Engine Manufacturers

Cautionary

Market liquidity and appetite have continued to be robust, leaving little or no need for OEM engagement.

Regional Finding Insights

There are no material changes in financing patterns to flag quite yet, but we are mindful of financing trends as delivery volumes continue to increase, both by number of aircraft, type of aircraft (wide body/narrow body) and by geographical distribution, which is broadening. The “big 4” liquidity pools of, cash, leasing, debt and capital markets continue to dominate delivery funding, albeit the share of each of these capital stacks is expected to shift through 2025 and beyond. This is more discernable in the remaining part of the presentation, which focuses on particular geographic regions and Boeings’ deliveries to those regions. Furthermore, we will add more detail on refinancing events (where data is available) over the balance of this year and beyond. Heightened activity in this space will certainly impact cash funded volumes and the associated transfer to other funding sources; we will report out again in our full-year assessment in Q1 2026.

Our regional Boeing Customer Finance teams have collected their insights for the first half year in the accompanying slides, as well as adding some perspectives on how the 3rd party financing market may play out, alongside those forces that impact financing decisions for airline and funder alike.

As always, we encourage you to reach out to discuss the document with your Boeing Customer Finance contacts.

North American airlines continued to rely significantly on cash to fund single-aisle deliveries in the first half of 2025, reflecting still-healthy liquidity positions. We have seen the shift towards post-delivery financing occur more frequently in North America and those financings are not featured in this data. Banks and lessors each captured meaningful portions of single-aisle financing, while widebody deliveries were supported by a more balanced mix across cash, bank debt, capital markets, and lessor financing.

Despite expectations for higher issuance in 2025, no new secured capital market transactions (Enhanced Equipment Trust Certificates) for Boeing aircraft deliveries were issued in the first half of the year. Broader macroeconomic and policy uncertainty resulted in wider spreads in the March-April timeframe and tempered capital markets activity, while competition among banks and lessors remained strong. Looking ahead, higher delivery volumes anticipated in the second half of 2025 are expected to drive greater use of external financing across both advance payment and delivery financing.

Financing for deliveries to Boeing customers in Latin America during the first half of 2025 remained concentrated in two channels: sale-leasebacks (SLB) and Japanese Operating Leases with Call Option (JOLCO) (which are categorized as bank debt). The distribution was broadly in line with 2024, underscoring the continued reliance on these products as the region’s primary sources of financing for airlines taking delivery of Boeing aircraft. These structures are expected to remain the dominant sources of delivery financing in Latin America through 2025, with any changes driven by aircraft type and customer mix. Although not reflected in the region’s financing distribution, Latin American airlines continued to source new Boeing single aisle aircraft from lessor order books.

The volume of deliveries in the Asia-Pacific and India region continues to trend positively, with deliveries to the region on pace to increase 20% compared to the year prior. However, this remains subdued compared to pre-pandemic levels. Looking ahead, we expect this region to continue receiving a significant share of all Boeing deliveries, catering to a diverse array of credits.

Single-aisle deliveries are primarily directed to India-based carriers, who rely on lessor financing through sale-leaseback transactions. We anticipate that reliance on lessor financing will grow in this region, particularly among single-aisle customers in India and Southeast Asia. We have observed some financiers approaching internal credit limits on Indian exposures in light of material aircraft deliveries over the preceding 12 months. We are, however, encouraged to see additional products, including credit-enhanced financing, begin to step into this market.

Widebody deliveries in the region were predominantly to major full-service carriers utilizing cash or bank debt. In Northeast Asia, our customers from Japan and Korea continue to leverage export credit agencies, which remain an efficient means of diversifying their financing.

We are witnessing positive developments towards the ratification, implementation, and enforcement of the Cape Town Convention in the region, particularly in India. This will be crucial for opening financing markets in jurisdictions with significant delivery streams in the near future.

As mentioned earlier, we expect the use of lessor financing to remain popular in the region, with an increasing relevance of export credit and credit-enhanced financing as deliveries to customers across the credit spectrum rise.

Deliveries in China remain on pace to slightly exceed the volume from the previous year. Chinese airlines continue to rely on domestic financiers and lessors, as transactions denominated in the local currency remain the most efficient option for both single-aisle and widebody deliveries.

Cash remains a prominent source of delivery financing within Europe throughout the first half of 2025, given the credit quality of customers taking deliveries in the region. Some refinancings, specifically for widebody aircraft, are anticipated, as airlines opportunistically tap competitive funding pools to align with their corporate financing strategy, including the JOLCO (Japanese Operating Lease with Call Option) and SLB markets. The JOLCO product remained active in the region and is expected to be a continued source of financing for top tier credits moving forward.

Lessor financing remains a key source of liquidity in Europe, specifically focused on single aisle aircraft.

The Credit Enhanced and Export Credit Agency (ECA) markets have seen limited activity through the first part of the year, but are anticipated to be a key financing resource for the region as Boeing deliveries begin to extend to a wider group of airlines.

In the first half of 2025, deliveries to Middle Eastern customers were primarily funded by bank debt and cash, with some use of credit enhanced structures in the single aisle space. Middle Eastern carriers continue to enjoy ample access to low-cost debt solutions, especially via the local banking market, as GCC financiers have been able to provide liquidity at extremely competitive rates.

Beyond this traditional commercial financing, some Middle Eastern airlines are also pursuing Islamic financing and JOL structures (both of which are reflected in the “Bank Debt” category). Larger carriers in the region have also continued to utilize their own cash to fund deliveries; though these carriers often refinance after delivery, we have yet to see that play out in the data for 1H2025.

In a break from last year’s norm, however, some Middle Eastern carriers have opted for credit enhanced financing structures – last year, we saw no credit enhanced financing in the region, but this year, 33% of single aisle deliveries to the Middle East have benefitted from this structure so far, with more to come in the second half of the year as we continue to see smaller carriers take deliveries. Additionally, Middle Eastern carriers are expected to increase sale-leaseback activities throughout the latter half of this year, bringing YE lessor financing statistics up to a similar level as 2024.

African airlines continue to leverage export credit agencies, specifically US EXIM, to fund both widebody and single aisle deliveries. Similar to last year, a significant majority of 2025 deliveries to the continent are expected to be funded by ECAs, allowing easier access to international financing sources and alleviating the credit pressure that many African carriers face. Unlike last year, however, which saw no lessor financing (i.e. sale-leasebacks) in the region, we have seen SLB opportunities open up in the first half of 2025, which we expect to continue to see through the end of the year. This is a positive signal for growing lessor confidence in the region.

Methodology

Boeing Commercial Airplanes Customer Finance created the Commercial Aircraft Finance Market Outlook (CAFMO) to provide an analysis of the sources of financing for new commercial airplane deliveries (for aircraft 90 seats or above).