Fitch: Aircraft Finance Likely To See New Sources In 2012

Alternative funding sources are likely to fill an expected gap in commercial-aircraft financing next year due to tightened lending conditions in Europe and continuing uncertainty in global markets, according to Fitch Ratings.

Still, any further significant tightening of credit conditions could pose a major threat to the large-commercial-aircraft outlook for 2012, the credit-ratings company said.

Over the next two years, the mix of funding sources is likely to shift away from commercial banks and export credit agencies as lessors and financially strong airlines take a bigger role. Non-European banks, especially in Asia, also may fill financing voids left by European lenders.

Aircraft-industry financing requirements are expected to grow about 20% year-to-year to between $85 billion and $90 billion for 2012. Based on Fitch’s assumption that purchases will have a 20% to 25% cash or equity component, about $65 billion to $70 billion will be required from other sources. A significant amount of funding also will be needed for refinancings, Fitch said.

Fitch expects deliveries of large aircraft–those with at least 100 seats–will increase an estimated 15% to 1,160 next year, with additional growth of 9% in 2013.