LEASING STRATEGY
Boeing takes huge bet on 747 hauling cargo, not people
Boeing has a temporary plan to save the iconic but slow-selling 747 jumbo jetliner: buying its own aircraft and leasing them to cargo haulers. With the effective shutdown by Congress of the US Export-Import Bank, which traditionally has helped overseas carriers buy aircaft, Boeing lost a key sales tool. Making matters worse, leasing companies have been hesitant to finance a plane with a dwindling customer base. So, Boeing is now hiring out the massive 747s to cargo carriers in countries such as Russia and Azerbaijan, which increases the company’s exposure to potential defaults on payments. Until the end of 2016, Boeing had provided financing valued at $1.26bn to 747 customers through Boeing Capital Corporation, filings show. That is about a fivefold increase from the close of 2012. In fact, 747-related loans and operating leases now account for about a quarter of the portfolio managed by Boeing’s lending arm. As the air-cargo market recovers, the strategy may pay off for Boeing. The...
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