Finding $1.1 trillion to fund 9,000 aircraft deliveries projected to be required in Asia-Pacific over the coming years is a huge challenge and Chinese banks are becoming an increasingly important source of finance for the aviation industry, speakers told the audience at Commercial Aviation Online's Inside Air Finance conference in Hong Kong in early September.
Airbus had anticipated that some Chinese airlines would need to turn to export credit agencies to fund their 2009 deliveries, but were able to tap local debt financing instead."There are a number of local banks that have been able to back up Chinese domestic deliveries," says Airbus's structured finance manager, Nicolas Chretien.
Chretien points out 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 have found the right set-up and built up knowledge in their teams".In 2007, the Chinese government issued five licences to domestic banks to set up subsidiaries covering the aircraft finance market.
Industrial and Commercial Bank of ChinaLeasingglobal head of aviation finance Johnny Lau says the government is planning to issue another 10 licences over the next two years. "There could potentially be 10-15 leasing companies in China with commercial banks parents," he adds.
ICBC Leasing is in expansion mode after its parent recently approved a 3 billion yuan ($439 million) capital injection. "To date we done 22 aircraft financing deals but we have the capacity to expand very quickly," Lau says. According to him, ICBC Leasing could finance another 10 aircraft through the end of this year.
In addition to an expansion of their local financing activities, all Chinese banks have tied-up with Airbus and Boeing in the past two years to work together on financing solutions.
Are financiers more optimistic that the aircraft funding gap can be plugged?
Source: Airline Business
