In a major policy reversal, Boeing is turning the customer finance unit it inherited from McDonnell Douglas (MDC) into "a full-service financing organisation".
The former MDC finance unit, renamed Boeing Capital, will be combined with the finance services of its treasury as part of the move from Long Beach to Seattle. The new unit will be promoted as a fully fledged customer finance unit.
For years Boeing resisted such a move, claiming it would rather invest in research and development than customer finance. It acted as a lender of last resort from a back office, downplayed its role in customer finance, refused to set up a separate finance unit, and sold any customer obligations as soon as possible. Its balance sheet rarely carried more than $3 billion in customer finance.
Nothing in Boeing's explanations about this new unit hints at the profound policy change it represents. Boeing Capital starts with a $6 billion portfolio. The day after its announcement, Boeing revealed that it had clinched a $1.3 billion deal to convert 44 757s into freighters and lease them to DHL Worldwide Express. This is the largest lease transaction Boeing has ever made.
Foreseeing that operating lessors might consider it a potential rival, Boeing gave major lessors advance notice of its intentions. Most took the news in their stride, but Boullioun Aviation publicly complained: "We don't feel very comfortable with it right now."
Source: Airline Business
