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Aircraft financing market shows improvement

In the past year, the aircraft financing market has continued to improve, said RBC Capital Markets analyst Robert Stallard in a new report.

The improvement was helped by low central bank interest rates and a solid recovery in the airline industry, Stallard writes.

“Going forward, we expect the role of government financing to ease, offset by other finance providers,” he said.

Private financing providers are stepping in.

There’s been a flurry of leasing company start-ups this year and moves by banks that have survived the downturn to increase their exposure in the aircraft financing market, Stallard said.

Airline traffic globally was good in October. Load factors increased to 82.3 percent in October.

In the next couple of years, Stallard said he expects the financing environment for airlines to  be helped by low base rates and good access to capital.

That helps support the aerospace industry because airlines will be more able to afford the aircraft they want to help them expand regions and replace less fuel efficient aircraft in other regions.

Stallard expects demand for new aircraft to remain robust moving into 2011. That helps support production rates at Boeing and Airbus and grow the aftermarket.