Managing Through Our Challenges  

In comparison to other industries, aviation has been quite fortunate in the face of the current global financial crisis.

Walt Skowronski President Boeing Capital Corporation

A lot of the credit goes to product demand. Even though oil prices have moderated, Boeing and our airline customers recognize that fuel prices have moved to a more expensive plateau, which raises the demand premium for our new, fuel efficient airplanes. At the same time, a geographically diverse customer base has generated a balanced demand distribution, distinguishing the current cycle from all previous ones.

Nonetheless, the global economic turmoil has created market conditions that are clearly more challenging than we have seen in many years.

For Boeing, this will likely mean that for the first time in nearly three years, we will provide some customer financing support. We have been taking steps to prepare for this possibility, and the financing levels we foresee appear to be very manageable. Based on our experience and industry facts and data, we are cautiously optimistic for the future.

For the reasons outlined in this edition, we do not subscribe to dire predictions of hundreds of “whitetails” piling up outside the production hangars. Nor are we among those who predict tens of billions of dollars in aircraft financing shortfalls. Market pressures will inevitably cause temporary dislocations. However, our approach of carefully tracking the financing for each delivery gives us confidence that what we tell the world is more reliable than what we have heard from
various external speculators.

We acknowledge our industry’s current challenges and we do not underestimate any one of them. We believe, however, that aviation has a balanced path forward, one that will allow the industry to emerge on the other end of this unprecedented crisis stronger, more efficient and more profitable.

As always, you can look forward to us sharing our research and viewpoint through our ongoing series of financiers and investor outreach events and future editions of Point-to-Point. 2009 will surely be an interesting year. We are pleased that we can accompany you on the journey!