Boeing’s customers are flying through turbulent times. ‘The industry’s aggregate financial health remains under the shadow of the US network carriers,’ BCC said in its latest regulatory filing to the US Securities & Exchange Commission. ‘Almost half the US capacity is flying in bankruptcy. The global airline industry is now forecast to lose more than $7,000 million in 2005. As in 2004, US airlines are expected to lose more than this industry-wide total, with profits considerably lower compared with 2004 being achieved in Asia and Europe.’

With US carriers forming a substantial part of BCC’s portfolio, the downturn in the US aviation sector has forced the company to increase its efforts overseas, particularly in the Middle East. Earlier this year, Dubai was selected to host one of BCC’s annual financiers and investors’ conferences, which are the core element of the company’s investor outreach programme.

‘We asked ourselves: ‘Are we reaching out to the right constituencies?” says BCC aircraft financial services (AFS) general manager Scott Scherer. ‘We decided that we needed to spend some quality time in the Middle East, given the amount of growth that is occurring here. We thought about a good venue and Dubai stood out, for two reasons. One, the amount of commercial activity, and Dubai’s importance as an aviation centre, but also the Dubai Air Show. We want to make it efficient to attend our conferences.’

About 50 companies attended the Dubai conference, which was held during the November air show. These potential investors included regional banks, funds, investors and operating lessors. ‘It was a very good number for our first time,’ says Scherer. ‘We anticipate more in the future. We’ve learned a lot from this initial conference.’

Boeing is also looking at long-term trends. Today, 27 per cent of the global fleet is financed through operating leases, a trend it sees rising to 35 per cent in the next five years. Commercial bank debt is also important, but, following the terrorist attacks in New York and Washington on 11 September 2001, many financiers have sold their aviation portfolios.

‘Some banks would argue there is too much commercial bank debt out there, because there are so many people who want to be in the market,’ says Scherer. ‘The margins are getting pretty thin. And what’s going to happen in the next downturn?’

Another source of finance is export credit. ‘This has been a very reliable source of financing,’ he says. ‘It tends to go up as a percentage of financing in a more difficult market. As the commercial market withdraws, it becomes increasingly important. We tend to see variations depending on where we are in the business cycle.’

Such funding has been at the centre of regular spats between Boeing and Europe’s Airbus. In the case of Boeing, the US Export-Import Bank is a crucial conduit. Critics argue that it provides substantial subsidies to the Seattle-based company. For Airbus, similar charges are levelled at export credit agencies such the UK’s Export Credits Guarantee Department (ECGD), Germany’s Hermes and France’s Coface.

‘Part of our job is to expand and facilitate capital markets,’ says AFS regional managing director John Matthews. ‘Each region has unique sources of capital; local bank markets, for example, particular to that region. This region happens to have a lot of liquidity and a structure that is somewhat unique, so far as Islamic financing is concerned. Because of the a