China has come to the rescue as aircraft manufacturers seek new sources of finance for their airliner deliveries in the credit crunch.
Speaking at the Commercial Aviation Online Inside Air Finance conference yesterday, Airbus and Boeing executives echoed the view that the country's banks are becoming an increasingly important source of finance for the aviation industry.
"Rather than a funding gap [predicted for new aircraft deliveries] this year, we've seen a redistribution of financing sources," says Airbus's structured finance manager, Nicolas Chretien.
Airbus had anticipated that some Chinese airlines would need to turn to export credit agencies to fund their 2009 deliveries, but were able to find local financing. "There are a number of local banks who have been able to back up Chinese domestic deliveries," he says.
Both Airbus and Boeing have concluded tie-ups with Chinese banks to work together on financing solutions, with operating leases being one area to be explored. Airbus signed up with Industrial and Commercial Bank of China (ICBC) in June, while Boeing has concluded a series of agreements since the end of 2008, says Boeing Capital's managing director for Asia, Foster Arata. He says Boeing has agreements with ICBC as well as China Development Bank, China Construction Bank and Bank of China.
Airbus's Chretien says that Chinese banks have shown "an increasing willingness" to move towards the operating lease market and he expects they will develop "operating lease platforms once they've found the right legal set-up and built up knowledge in their teams".
He adds that because of strict regulation on off-shore investment he expects to see a two-phase expansion of the Chinese banks' involvement "first in the domestic market and then as a second step outside the borders".
Arata concurs, saying he expects China will grow its involvement in 2010 and possibly expand internationally "assuming offshore companies can be put in place".
Source: Flight Daily News
