Boeing signs $5b vendor funding deal with Castlelake

Investment firm Castlelake signed an agreement with Boeing to provide as much as $5bof financing to airlines and other companies looking to buy planes from the aerospace manufacturer. Boeing Capital, the company’s finance arm, is reluctant to lend to customers as the planemaker’s debt levels have swelled, first because of its 737 Max jet being grounded, and then because of the pandemic. Boeing’s debt totaled around $60b as of the end of September, more than double its level at the end of last year and four times the amount at the end of 2018. “We prefer to use third-party financing rather than Boeing’s balance sheet, certainly at today’s time where we’ve leveraged up over the course of the last 18 months,” said Tim Myers, president of Boeing Capital. Castlelake will finance the 737 Max among other aircraft, he said. Meanwhile, airlines increasingly need financing as the pandemic has resulted in sharp drops in demand for air travel, and some traditional lenders are retrenching. Steep losses are expected to continue into 2021, according to the IATA. That creates an opportunity for alternative investment firms to step in. Castlelake, which has invested in aviation for 15 years, launched a new aviation lending program in November. “There’s huge disruption in this industry and the well-managed airlines right now are focused on managing cash burn and maintaining liquidity,” said Evan Carruthers, chief investment officer and co-founder of Minneapolis-based Castlelake.<br/>