1) They are a huge market for Boeing and Airbus.
2) Now Chinese banks offer financing not only for planes purchased for Chinese market by those sold in international market - Qantas A380, Southwest airlines.
3) In this tight credit situation Airbus/Boeing is desperate to find financing for its buyers and the Chinese are helping (they have lots of US$) - So in effect they need Chinese help to sell more planes in international markets
4) Financing planes also means financing engines.
Chinese aims to become global player in aircraft manufacturing. With this type of influence they can easily persuade Airbus or Boeing and GE or PW or RR to set up more plants, technology transfer in China. After all they could ratchet up pressure and offer to buy planes only from airbus or Boeing and do the same for financing.
As you know, once the plant is up you start having a whole generation of Airbus/Boeing trained Chinese workers with their level of QC, a whole generation of Chinese managers - basically how 1st world nations build planes after that ..........
Of course Beoing /Airbus CEO knows what is happening but shareholders and bonus depends on profits. So what can you do? Play hardball and lose marketshare to the competitor?
Jan. 28 (Bloomberg) -- Airbus SAS said more carriers are relying on Chinese financial services firms to fund aircraft purchases, helping keep deliveries near a record this year.
Deals backed by Chinese institutions in the last year include Bank of China BOC Aviation’s sale-lease-back of three Southwest Airlines Inc. planes, and Industrial and Commercial Bank of China Ltd.’s first international leasing transaction, with British Airways Plc. Nigel Taylor, who leads Airbus’s aircraft finance, said China will gain more clout this year.
“The great advantage of China is that the country still has a fairly deep pocket of dollars, which is perhaps the major reason for their beginning to be more active than some of the historical lessors,” Taylor said in an interview from Toulouse, France, where Airbus is based.
The ascent of Chinese institutions from local funding suppliers to a global stage reflects the country’s rise in the air-travel industry. Chinese airlines will account for 20 percent of all Airbus planes delivered in 2010, compared with 3.5 percent a decade ago, with the majority of those jets getting funding from their home country, Taylor predicted.
The 979 planes delivered globally last year required some $70 billion in financing. Transactions include cash purchases, often refinanced with bank debt or sale-lease-backs; commercial bank debt; bank debt backed by government export credit agencies; rentals lessors such as General Electric Co.’s Gecas, as well as funding from capital markets, including loans that package multiple planes from different airlines to spread risk.
Chinese Accord
Chinese institutions over the last two years also arranged a syndicated bank facility for Qantas Airways Ltd.’s first two A380 superjumbos. Other non-Chinese airlines that have benefited from Chinese financing include Deutsche Lufthansa AG, Air France KLM Group and Virgin Blue Holdings Ltd.
Airbus signed an accord earlier this week with CDB Leasing Co., one of China’s largest leasing companies, for financing of support sale and leaseback transactions of as much as $4 billion over the next five years for Airbus aircraft. The company last year set up a final assembly plant in China to serve the market.
Planemakers have an interest to act as intermediary between airlines and the financing side whenever airlines struggle to get commercial banks or capital markets onboard for a purchase. A single-aisle plane, the most widely purchased planes in the industry, has a list price from $50 million to $90 million, while wide-body planes cost more than twice as much.
Record Deliveries
The record number of planes delivered by Airbus and Boeing last year defied concern that airlines would have trouble financing transactions in the wake of the steepest economic contraction in half a decade. This year, Airbus and Boeing aim to maintain deliveries at a similar level, they said.
Commercial deliveries will fall to 460 to 465 aircraft this year, after 481 aircraft shipped to customers in 2009, Boeing predicts. Airbus had 498 shipments last year, retaining the title held since 2003 as the largest commercial-plane builder.
Chinese institutions showed their resilience last year, provided financing for all aircraft shipments into the country without backing from either the U.S. Export Import Bank or European credit agencies. Airbus entered 2009 predicting it would need up to 50 percent of all deliveries backed by government guarantees, and the final tally came to just 34 percent. Boeing only needed state backing on 26 percent of jets.
‘Solid Job’
“Chinese financial institutions have done a solid job of financing airlines in China; now they’re expanding rapidly beyond Chinese borders, and that should continue,” said John Leahy, the chief operating officer at Airbus.
Boeing has also pursued greater links with Chinese banks. Chinese financial institutions financed about 10 percent of all 2009 deliveries, including both commercial bank debt financing and Chinese lessors, according to Kostya Zolotusky, the managing director of Boeing’s financial services unit.
Boeing last November joined with CDB Leasing and China Construction Bank, bringing to six the number of Chinese organizations working with the planemaker, as the U.S. company seeks to expand its presence in the world’s fastest growing aviation market.
“All the fundamentals are there: an economy running a significant surplus with a strong banking sector, so aircraft that are deployable globally and are very liquid assets become attractive to them,” Zolotusky said. “They’re becoming an important contributor to the global aircraft finance market and we anticipate that this will continue.”
To contact the reporters on this story: Andrea Rothman in Toulouse, France at [email protected]
Last Updated: January 27, 2010 19:01 EST
2) Now Chinese banks offer financing not only for planes purchased for Chinese market by those sold in international market - Qantas A380, Southwest airlines.
3) In this tight credit situation Airbus/Boeing is desperate to find financing for its buyers and the Chinese are helping (they have lots of US$) - So in effect they need Chinese help to sell more planes in international markets
4) Financing planes also means financing engines.
Chinese aims to become global player in aircraft manufacturing. With this type of influence they can easily persuade Airbus or Boeing and GE or PW or RR to set up more plants, technology transfer in China. After all they could ratchet up pressure and offer to buy planes only from airbus or Boeing and do the same for financing.
As you know, once the plant is up you start having a whole generation of Airbus/Boeing trained Chinese workers with their level of QC, a whole generation of Chinese managers - basically how 1st world nations build planes after that ..........
Of course Beoing /Airbus CEO knows what is happening but shareholders and bonus depends on profits. So what can you do? Play hardball and lose marketshare to the competitor?
Jan. 28 (Bloomberg) -- Airbus SAS said more carriers are relying on Chinese financial services firms to fund aircraft purchases, helping keep deliveries near a record this year.
Deals backed by Chinese institutions in the last year include Bank of China BOC Aviation’s sale-lease-back of three Southwest Airlines Inc. planes, and Industrial and Commercial Bank of China Ltd.’s first international leasing transaction, with British Airways Plc. Nigel Taylor, who leads Airbus’s aircraft finance, said China will gain more clout this year.
“The great advantage of China is that the country still has a fairly deep pocket of dollars, which is perhaps the major reason for their beginning to be more active than some of the historical lessors,” Taylor said in an interview from Toulouse, France, where Airbus is based.
The ascent of Chinese institutions from local funding suppliers to a global stage reflects the country’s rise in the air-travel industry. Chinese airlines will account for 20 percent of all Airbus planes delivered in 2010, compared with 3.5 percent a decade ago, with the majority of those jets getting funding from their home country, Taylor predicted.
The 979 planes delivered globally last year required some $70 billion in financing. Transactions include cash purchases, often refinanced with bank debt or sale-lease-backs; commercial bank debt; bank debt backed by government export credit agencies; rentals lessors such as General Electric Co.’s Gecas, as well as funding from capital markets, including loans that package multiple planes from different airlines to spread risk.
Chinese Accord
Chinese institutions over the last two years also arranged a syndicated bank facility for Qantas Airways Ltd.’s first two A380 superjumbos. Other non-Chinese airlines that have benefited from Chinese financing include Deutsche Lufthansa AG, Air France KLM Group and Virgin Blue Holdings Ltd.
Airbus signed an accord earlier this week with CDB Leasing Co., one of China’s largest leasing companies, for financing of support sale and leaseback transactions of as much as $4 billion over the next five years for Airbus aircraft. The company last year set up a final assembly plant in China to serve the market.
Planemakers have an interest to act as intermediary between airlines and the financing side whenever airlines struggle to get commercial banks or capital markets onboard for a purchase. A single-aisle plane, the most widely purchased planes in the industry, has a list price from $50 million to $90 million, while wide-body planes cost more than twice as much.
Record Deliveries
The record number of planes delivered by Airbus and Boeing last year defied concern that airlines would have trouble financing transactions in the wake of the steepest economic contraction in half a decade. This year, Airbus and Boeing aim to maintain deliveries at a similar level, they said.
Commercial deliveries will fall to 460 to 465 aircraft this year, after 481 aircraft shipped to customers in 2009, Boeing predicts. Airbus had 498 shipments last year, retaining the title held since 2003 as the largest commercial-plane builder.
Chinese institutions showed their resilience last year, provided financing for all aircraft shipments into the country without backing from either the U.S. Export Import Bank or European credit agencies. Airbus entered 2009 predicting it would need up to 50 percent of all deliveries backed by government guarantees, and the final tally came to just 34 percent. Boeing only needed state backing on 26 percent of jets.
‘Solid Job’
“Chinese financial institutions have done a solid job of financing airlines in China; now they’re expanding rapidly beyond Chinese borders, and that should continue,” said John Leahy, the chief operating officer at Airbus.
Boeing has also pursued greater links with Chinese banks. Chinese financial institutions financed about 10 percent of all 2009 deliveries, including both commercial bank debt financing and Chinese lessors, according to Kostya Zolotusky, the managing director of Boeing’s financial services unit.
Boeing last November joined with CDB Leasing and China Construction Bank, bringing to six the number of Chinese organizations working with the planemaker, as the U.S. company seeks to expand its presence in the world’s fastest growing aviation market.
“All the fundamentals are there: an economy running a significant surplus with a strong banking sector, so aircraft that are deployable globally and are very liquid assets become attractive to them,” Zolotusky said. “They’re becoming an important contributor to the global aircraft finance market and we anticipate that this will continue.”
To contact the reporters on this story: Andrea Rothman in Toulouse, France at [email protected]
Last Updated: January 27, 2010 19:01 EST
