Boeing debt totalled around $60 billion 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.
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. Thus, Castlelake will finance 737 Max purchases.
'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 Boeing Capital president Tim Myers.
Losses are expected into 2021, according to the International Air Transport Association. Airlines increasingly need financing as the Covid crisis resulted in sharp drops in demand for air travel, and some traditional
'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.
Castlelake financing will be offered at terms of eight to 12 years under the partnership, which lasts until the end of 2022 but can be extended for two years after that.