Boeing to move historic financing arm under jet business
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[February 17, 2023] By
Valerie Insinna and Tim Hepher
WASHINGTON/PARIS (Reuters) -Boeing said on Thursday it is absorbing its
decades-old aircraft-financing arm into its commercial airplanes unit as
part of a push to simplify its corporate structure.
After the retirement of Boeing Capital Corp (BCC) President Tim Myers
this spring, Boeing said it would "realign" the financing arm within the
commercial airplane unit while maintaining "strong coordination" with
Boeing's treasury arm.
Airfinance Journal earlier reported the move.
Boeing Capital, a subsidiary of Boeing, provides asset-based financing
and leasing to airlines lacking access to funding.
The realignment will "focus resources on our core work of supporting our
customers and their financing needs," Boeing Chief Financial Officer
Brian West said in an internal memo viewed by Reuters.
The closing of Boeing Capital continues a trend for Boeing to
consolidate its operational structure and ends a significant chapter in
the fast-expanding air finance industry.
Boeing in November announced a reorganization of its defense unit that
halved the number of sub-divisions. It has also moved to cut 2,000
white-collar jobs in finance and human resources.
FIREPOWER
The move comes days after the final delivery of the Boeing 747.
BCC was credited with prolonging the reign of the Queen of the Skies for
several years after stepping in to finance the sale of freighters to
Russia's Volga-Dnepr with leasing deals when other financiers were
reluctant to back the aging jet.
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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
Operating as a lender of last resort, BCC was a source of firepower
in the global jet market, dating back to 1968 under McDonnell
Douglas and working alongside the U.S. EXIM bank, which it fought to
save in a Congressional dispute.
BCC stood ready to buy back jets 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 placed 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 back some freshly built A340s as a trade-in to smooth the
sale of Boeing 777s - prompting a brief standoff as Airbus refused
to let its rival take delivery in Toulouse.
As the availability of capital for aviation has grown, with
investors hunting for dollar-denominated yields, BCC has been a
vocal proponent of multiple types of funding for airlines.
"The asset class is real. It's not a niche class any more," industry
veteran Myers told reporters in 2018.
A Boeing spokesperson said the shift will provide airlines "with
more consistent support" for arranging aircraft financing. Boeing
did not say whether any jobs would be affected.
Rob Martin, finance chief for the commercial airline business, and
Boeing Treasurer David Whitehouse will be responsible for the
transition, West said in the memo.
(Reporting by Valerie Insinna; editing by Ben Klayman, Stephen
Coates and Gerry Doyle)
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