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A220 Financing Becomes Easier As Confidence In Residuals Improves

May 13, 2019

To date some of sales of the CSeries (A220) may have been difficult to secure because of the potential problems in finding finance. This created a circle of uncertainty as fewer orders increased the potential risk for lenders due to a limited operator base and therefore remarketing opportunities. This concern over remarketability has played a role in containing residual value expectations. But more recently the A220 has seen interest from lenders with Avation financing five A220-300s to be operated by Air Baltic for twelve years. The inclusion of the A220 in the latest Delta EETC provides further evidence that the A220 is suitable for mainstream financing, although EETCs are more focused on the credit than the asset. The round of financing may however be viewed as a means of realizing a greater return due to potentially greater risk and the lack of opportunity to finance the A320 or B737NG. The acquisition by Airbus overcomes some of the risk and Export Credit agencies may also be involved.

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