On Tuesday, the Boeing Co. (NYSE:BA) introduced its latest aircraft finance market outlook for the year 2015. The eye-catching amount is $124 billion as forecasted for the upcoming commercial deliveries from the previous value of $115 in 2014. The aircraft giant also predicted that the deliveries will reach up to $156 billion by 2019. As a result, the main concern raised at the release of the market outlook was how all airplanes will be financed.
For this issue, Boeing (NYSE:BA) expects loans from banks and the capital markets to finance around 60% of the deliveries as the New Year starts. Also, by the help of cash accounting and export credit, the company will cover 23% and 15% of its finances. However, the aircraft leasing companies, as predicted, will be using loans from bank and capital market to achieve around 40% of the next year deliveries. Let’s look at the Boeing’s (NYSE:BA) outline of the market.
A lot of commercial banks in air travel are considered to be fairly new to the aircraft finance business. With the implementation of strict regulations and restrictions, the first-tier carriers are to experience more competition, due to which the second-tier airlines will notice a greater request for the leasing of airplane.
Boeing (NYSE:BA) believes that if the international airlines can get the availability of the capital markets more proficiently, the companies will feel more fulfilled from the aircraft-secured loans as more are willing to provide assistance in meeting the innovative portfolio sell-down structures.
The access of export credit persists to be in suspicion, even though it’s predicted to stay stable. The charter for the U.S import-export bank, at the end of September, was expired and extended for nine more months. Boeing (NYSE:BA) makes the most of its revenue from its imports and exports. As per a review by Standard & Poor’s, the funds required by the customers can rise from $3.5 billion up to $5.5 billion.
Boeing acknowledges the fact that export credit is very important and plans to stay on low levels.
The use of export credit will probably be restricted to the new upcoming companies and a decent quantity of financing is required for the broad business activities employed by reputable airlines.
For the most of 2014, Boeing (NYSE:BA) made the commercial revenues of $43.15 billion from the aircraft services, and if the corporation tries and maintains the same rate of revenue earned, it can be said that the year will close off with almost $60 billion in aircraft sales. This, however, is around just the half of $124 billion that the company has forecasted to earn in the upcoming year from international sales.
So, we looked upon the reasons of what could lead Boeing Co. to become the best Dow stock of 2015. Many significant actions need to be taken by Boeing (NYSE:BA) next year and most importantly a heads up on the improvement of the dividends will prove beneficial.
In Tuesday’s premarket, Boeing (NYSE:BA) shares were sold at $126.26 in 52 week range from $116.32 to, $144.57.