KEY POINTS:
Boeing may return to financing planes for some commercial customers as the credit crisis bites deeper.
Vice-president of marketing Randy Tinseth said in Auckland yesterday that the company expected to have to fund a small proportion of planes for customers who could not raise the money from other
sources.
List prices for new-generation jets range from US$74 million to US$300 million and, because of the worsening credit crunch, Boeing had for the past few months examined the prospect of stumping up to help some customers.
Easy credit, mainly from European banks, airlines' own cash and equity raising by airlines or leasing companies meant Boeing had not been in the finance game for at least two years, Tinseth said.
"Before the issues you've seen over the last week we'd recognised the potential for us to get back to financing airplanes so we had prepared to finance some in the second half of 2009."
One of Boeing's biggest customers, International Lease Finance, is a subsidiary of AIG, lent US$85 billion by the United States government last week to help it avoid bankruptcy.
International Lease Finance is one of AIG's strongest assets with commitments to buy US$18 billion of new aircraft from Boeing and Airbus. Of its approximately 100 aircraft on order from Boeing, about 70 are 787s which have been beset by delays.
Last week ILFC said it was borrowing US$6.5 billion in emergency funding, the maximum allowed under its three credit lines. The cash, plus revenue from operating activities, would be "sufficient to meet its debt obligations into the first quarter of 2009", the Los Angeles company said in a regulatory filing.
Tinseth would not comment on ILFC's predicament, saying only that Boeing would "continue to watch and monitor" turbulent financial markets.
"Our first read on this situation is that the fundamentals haven't changed much for our industry. We ... will have the ability to finance and deliver on our backlog and that goes for our leasing customers as well."
Of greater immediate concern was the strike by 27,000 machinists which has paralysed production at Boeing's big manufacturing plants near Seattle and is into its third week.
One analyst has estimated the strike could cut revenue by US$100 million to US$110 million a day if it lasts as long as the 28 to 69 days of previous strikes. There would be further delays to the 787 Dreamliner.
Machinists who assemble the aircraft are striking over pay, retirement and medical benefits and outsourcing of manufacturing to other countries.
Tinseth said it was pointless speculating how long the strike would last, adding that a two-week start-up period would be needed once staff returned to work. But despite the immediate problems, he said the outlook for aviation over the next 20 years waspositive.
Annual traffic growth of 5 per cent a year was forecast worldwide and in Oceania 5.2 per cent was expected.
Around 29,400 new aircraft worth US$3.2 trillion would be needed over the next 20 years. Of those Oceania, mainly Australia, would need 600 valued at US$90 billion.
DREAM MACHINE
* The strike at Boeing has caused further delays for the 787 Dreamliner.
* Boeing says fundamental design and technologies are working well.
* Air New Zealand has eight 787-9s on order, with the first to arrive in 2012.
* The aircraft has a range of up to 16,300km, making nonstop flights possible from Auckland to cities such as New Delhi, Johannesburg, Rio De Janeiro, New York and Anchorage.
