© Reuters. FILE PHOTO: The Boeing logo is seen on the side of a Boeing 737 MAX at the Farnborough International Airshow, in Farnborough, Britain, July 20, 2022. REUTERS/Peter Cziborra
By Valerie Insina and Tim Hepher
WASHINGTON/PARIS (Reuters) – Boeing said on Thursday it is absorbing its decades-old aircraft financing arm into its commercial aircraft unit as part of an effort to streamline its corporate structure.
Following the retirement of Boeing (NYSE:) Capital Corp (BCC) Chairman Tim Myers this spring, Boeing said it would “realign” the finance arm within the commercial aircraft unit while maintaining “strong coordination” with the financial arm. of Boeing’s treasury.
Airfinance Journal previously reported on the move.
Boeing Capital, a subsidiary of Boeing, provides asset-based financing and leasing to airlines that do not have access to financing.
The realignment will “focus resources on our core job of supporting our customers and their financial needs,” Boeing Chief Financial Officer Brian West said in an internal memo seen by Reuters.
The closure of Boeing Capital continues Boeing’s trend of consolidating its operating structure and ends an important chapter in the rapidly expanding airline finance industry.
Boeing announced in November a reorganization of its defense unit that halved the number of subdivisions. It has also taken steps to eliminate 2,000 white-collar jobs in finance and human resources.
FIREPOWER
The move comes days after the final delivery of the Boeing 747.
The BCC was credited with prolonging the Queen of Heaven’s reign for several years after stepping in to finance the sale of freighters to Russia’s Volga-Dnepr with lease agreements when other financiers were reluctant to back the aging aircraft.
Operating as a lender of last resort, BCC was a source of firepower in the global aircraft market, starting in 1968 under McDonnell Douglas and working alongside the US EXIM bank, which it fought to save in a congressional dispute. .
BCC was ready to buy back planes and lease them to airlines and helped shore up market support for the Boeing 737 MAX, according to market sources.
The roving financial support sometimes put the Boeing unit at odds with arch-rival Airbus, as both manufacturers sought innovative ways to support sales.
In one such encounter, people involved on both sides say, Boeing bought some newly built A340s in exchange to smooth the sale of Boeing 777s, leading to a brief standoff as Airbus refused to let its rival take delivery. in Toulouse.
As the availability of capital for aviation has increased, with investors seeking dollar-denominated returns, BCC has been a strong advocate of multiple types of financing for airlines.
“The asset class is real. It’s not a niche class anymore,” Myers, an industry veteran, told reporters in 2018.
A Boeing spokesman said the change will give airlines “more consistent support” in arranging the financing of aircraft. Boeing did not say whether any work would be affected.
Rob Martin, chief financial officer for the commercial airline business, and Boeing treasurer David Whitehouse will be responsible for the transition, West said in the memo.
