The Commercial Aircraft Finance Market Outlook 2025 captures Boeing’s review of financing activities for 2024 and considers trends we see as we move through 2025.
With this outlook, we worked to sharpen the focus on information points you closely scrutinize. We expanded our analysis of regional performances, emphasizing unique trends dependent on jurisdictional and credit factors. We project these trends may further develop as delivery volumes build back over the coming years.
We recognize there is asymmetry in the marketplace, with a challenging production backdrop through 2024 contrasted with a healthy pool of liquidity from most global capital sources. This dislocation created acute pricing competition for stronger credits, mixed at times with some caution towards situations seen to have higher risk. We observed nascent signs of concentration limits being approached at country and individual credit levels. As increasing deliveries catch up with demand, it is possible concentration limits will be tested further and could drive financing price upward from current lows.
We continued to observe a distinct bifurcation in capital deployment between widebody and single aisle aircraft over the recent years and placed additional emphasis in our assessment on the aircraft classes.
The return to a “steady state,” last observed in 2018, will reshape the financing landscape. There are many more nuanced elements, notably around regulation (in all its guises) that will impact this dynamic. We will consider the potential volatility on the horizon and we’ll be providing interim assessment during the course of this year of the aircraft financing environment.
There is more notable geopolitical and economic volatility and while this impacts our assessment of the respective performance of each capital pool, we try to avoid unnecessary refinement based on short-term events. We continue to review every source of financing with exacting detail, and we will continue to provide you with our assessment during 2025.
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 airline borrowers. Product innovation continues to expand beyond operating and finance leases, with an interest in advance payment financing expected to further develop in 2025. Lessors’ competitiveness is enabled by access to capital markets and bank financing to support purchase of aircraft in new and secondary markets.
Airlines are on pace to significantly increase the amount of new bond issuances for the second straight year. Spreads on both investment grade and non-investment grade airline bonds continue to narrow from elevated levels in early 2023. Debt maturities and refinancings are scheduled to peak in 2025/2026 from historically high amounts issued in 2020/2021.
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.
Export credit continues to be active with a healthy pipeline and we expect to see ongoing positive interest for this product.
Investors continued to demonstrate appetite for the sector, but relative value considerations play an important part in transaction selection.
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.
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.
Market liquidity and appetite have continued to be robust, leaving little or no need for OEM engagement.
Cash remained a significant source of funding for Boeing deliveries, although its share declined as lessors provided an increasing amount of financing, particularly for single-aisle aircraft. A lower volume of deliveries and distribution of customers also impacted the sources of financing, although the availability of capital remained robust across all product types.
Strong financial results combined with positive balance sheet and liquidity trends enabled Boeing’s customers in North America to continue funding most deliveries with cash on hand, reducing need for financing and increasing pool of unencumbered assets. Lessor interest in higher-tier credits remained strong, and increased use of finance lease products enabled lessors to compete with commercial bank funding. While capital markets financing, typically with Enhanced Equipment Trust Certificates (EETC), has been used to fund new deliveries in prior years, the sole new issuance from a North American airline in 2024 was collateralized with six different models of previously delivered Boeing aircraft. Based on today’s rate environment, we expect EETC issuance volume to increase in 2025.
Competition for funding of Boeing aircraft in 2024 was fierce, driven by low utilization of delivery financing across fewer aircraft. An increase in delivery volumes for 2025 will raise requirement for both advance payment and delivery financing. We expect North American airlines will retain a preference toward owning Boeing aircraft, limiting widespread use of operating leases and creating additional opportunities for finance lease products offered by banks, lessors and alternative lenders.
Financing for deliveries in 2024 to Boeing customers in Latin America was either provided by lessors or banks, with distribution generally determined by credit rating. Sale-leaseback (SLB) was a key source of financing, and lessors are expected to remain an important source of funding for 2025 and beyond. Although not reflected in the region’s financing distribution, Latin American airlines also obtained new Boeing aircraft from lessor order books. Select higher-tier credits were able to utilize Japanese tax lease transactions in 2024. Based on end-of-lease purchase option and participation of commercial lenders, a Japanese Operating Lease with Call Option (JOLCO) is classified with bank debt funding.
We expect similar trends to continue in 2025. An increasing diversification in aircraft type and customer mix can create opportunities for additional types of financing.
The volume of deliveries in the Asia-Pacific and India region saw a slight uptick in 2024 versus the previous year but remains subdued compared to pre-pandemic levels. Single-aisle deliveries were primarily to India-based carriers relying on lessor financing, particularly through sale-leaseback transactions. We expect reliance on lessor financing to grow with delivery volumes, especially for single-aisle customers in India and Southeast Asia.
Widebody deliveries in the region were predominantly to major full-service carriers utilizing cash or bank debt. In Japan, customers relied on JBIC-guaranteed loans, either at delivery or for refinancing postdelivery. Customers in Korea also leveraged export credit, which remains an efficient means to diversify their financing. Customers in Taiwan worked closely with their domestic banks to finance their widebody deliveries at very competitive pricing.
The ratification and proper enforcement of the Cape Town Convention are crucial to open financing markets in jurisdictions with significant delivery streams in the near term. With many deliveries in certain jurisdictions, we expect financiers who are active in the region today to approach concentration limits. Diversification of financing will be essential, especially those with a substantial number of wide body aircraft.
We anticipate the use of export credit financing will grow in the coming years as we increase the number of deliveries to customers across the credit spectrum and in jurisdictions where commercial financing may not be viable or efficient.
In 2024, deliveries to China saw a significant increase compared to the prior year, driven by an increase in activity with previously stored single aisle aircraft.
Chinese airlines relied on domestic financiers and lessors, with an almost even split between financing from domestic lessors and bank debt denominated in the local currency.
Widebody deliveries primarily consisted of freighter aircraft, financed through cash or bank debt.
We expect Chinese airlines to continue relying on their domestic financing markets for future deliveries, as RMB-denominated financing remains highly efficient for them.
Similar to 2023, cash remained the prominent source of delivery financing as large customers generated strong operating cash flows from increased passenger yields or preferred to hold unencumbered assets for potential refinancing. As a result, the contribution of debt financing was below historical levels. As delivery volumes and diversity of customers increase, broader contributions of financing are expected.
The Japanese Operating Lease with Call Option (JOLCO) market was also active for top-tier credits, providing low-cost financing predominantly for widebody aircraft. Export credit agency (ECA)-covered financing remained an important source of liquidity for both single-aisle and widebody deliveries, giving certain airlines access to financial markets.
Sustainability-linked financings continued to gain momentum within Europe as various airlines and lessors tied issuances to emission key performance indicators.
In 2025, we expect to see further JOLCO and ECA activity for both single-aisle and widebody aircraft. SLBs are expected to pick up, while at the same time, some lessors selectively provide finance leases as well. Some of the previous deliveries funded with cash are expected to be refinanced within the JOLCO and SLB markets.
Middle East regional banks were and continue to be very active on aircraft financing opportunities as a result of de-leveraging exercises undertaken by incumbent carriers and lower delivery funding requirement. Customers received favorable terms in a competitive environment, applying equally to widebody or single-aisle aircraft.
The sukuk and loan markets in the Gulf Cooperation Council (GCC) were a valuable pool of liquidity for lessors seeking to diversify their funding in 2024. This was supported by increasing sector specialization by a number of the GCC regional banks leaning into the aviation market.
African airlines continue to face operational issues and currency limitations, which tipped financing structures toward cash, supported financing and leasing options. Government support may still be called upon in certain financing transactions on the African continent, but broader sovereign funding limitations bring obvious challenges to these negotiations. Multilaterals will continue to play a part in financing African airlines, especially with the advent of the launch of the leasing platform by Afreximbank.
Operating lessors are important customers and partners, using the aircraft directly ordered from Boeing to support fleet development of airlines seeking access to fuel-efficient, new-generation aircraft. Lessors took delivery of 46 Boeing aircraft in 2024 across the 737 MAX and 787 Dreamliner families, in addition to the 777. Single-aisle aircraft were delivered to operators in 10 different countries, while widebodies were delivered to operators in six different countries.
The nominal number of aircraft financed and purchased by lessors declined in 2024 on lower overall delivery volumes. The number of aircraft funded with finance lease structures continues to increase as lessors pursue growth opportunities with higher-tier credits. The ability of lessors to both purchase and finance Boeing aircraft is enabled by access to competitive liquidity through unsecured and secured debt financing.
The increase in Asset Backed Securities (ABS) issuances should provide lessors with an additional financing tool to support financing of new aircraft or acquisition of aircraft in the secondary market.
We recognize the potential value of harmonized aircraft financing protocols that full adoption and implementation of the Cape Town Convention bring. Financiers welcome a more predictable application of the rule of law when assessing transaction risk, which feeds into their price models. Cape Town signatories benefit from access to a broader pool of capital providers with consequential improvements in the cost of financing, notably where ECA structures are deployed. Furthermore, the adoption and ratification of the Cape Town Convention may offer access to certain international markets with deeper pools of liquidity.
We remain supportive of the AWG initiatives to broaden full adoption of the Cape Town Convention and are encouraged by recent progress in a number of countries that value the broad benefits of its implementation.
Export Credit Agencies (ECA)-supported financing remains stable although slightly lower from 2023 levels. It is anticipated the ECA-supported financing will increase as manufacturer deliveries increase. The pipeline appears to be geographically diverse and asset agnostic. Certain ECAs are able to support predelivery payments, and we see an increased interest from customers for that product. We predict that 2025 will have an uptick in ECA-supported PDP financing.
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).
