Boeing's “steady production improvement” could support a recovery in enhanced equipment trust certificates (EETC) issuances in the second half of this year or next year, Fitch Ratings said on June 26, 2025.
Fitch noted that EETC issuances have been “muted in recent years” with it reflecting a “reluctance” from airlines to lock in fixed-rate debt at elevated levels. Additionally, confidence has subsided amid ongoing uncertainty around aircraft delivery delays.
“Persistent delivery delays have complicated EETC structures, which often pre-fund future aircraft deliveries and include a specified delivery window from the time of funding,” said Fitch. “If manufacturers fail to deliver within this window, airlines must return unutilised funds to investors and secure alternative financing for the delayed aircraft.”
However, Boeing's turnaround shows promise for the EETC's return as improved certainty and greater consistency in scheduled deliveries and production better serve the financing option.
“Rising aircraft deliveries bolsters confidence among suppliers and airlines, provides greater certainty for fleet planning and aircraft financing, and contributes to a more predictable operating environment for the sector,” said Fitch.
Last year, Boeing was marred with challenges from the Flight 1282 incident to the some 33,000 machinist strike that last seven weeks from September 13.
However, with a pay deal secured and the appointment of its new CEO Kelly Ortberg, Boeing has made a positive turnaround since and has continued its ramp up its production. The company is aiming to increase its FAA-imposed 38 per month production cap on the 737 MAX at some this year. The OEM will need to demonstrate stable and safe production of the jets before the cap can be increased to 42 per month.
The 737 MAX production rates have reached mid-30s per month. Fitch said it expects run rates to reach the 38 per month target in the third quarter of this year.
“The clearance of legacy inventory, with 10-15 previously built aircraft delivered each month, has provided a near-term boost to cash generation and working capital efficiency, while freeing up resources to support further production improvements,” said Fitch. “These operational milestones, along with the $24bn equity raise and the pending $10.55bn sale of Jeppesen, provide Boeing with greater financial flexibility to manage its backlog and future investments.”
With stability in its production, Fitch said this will benefit suppliers and airline customers.
“More reliable delivery schedules support long-term fleet planning and enable a more orderly retirement of older aircraft, which is expected to normalise over the next year," the agency said. "The stabilisation of Boeing’s supply chain, despite lingering risks from tariffs and geopolitical tensions, adds further confidence for tier-one and tier-two suppliers such as Howmet Aerospace and Hexcel Corporation, many of whom rely on steady volumes to manage costs and investment.”
However, Boeing may face another challenge ahead, with the UK's Competition and Markets Authority assessing the company's acquisition of Spirit AeroSystems. The latter was spun off from Boeing in 2005, before company announced plans to re-acquire the supplier for $4.7bn.
The authority launched an invitation to comment on June 26, which will run through July 15. This is not a formal investigation launch, but rather is seeking feedback from investors that will determine subsequent actions.
In a statement, the authority said it is assessing whether the merger would result in a “substantial lessening of competition” within UK markets.
Airbus had recently finalised its agreements with Spirit on April 28 to purchase certain facilities that supply its aircraft programmes, some of which are based in the UK.
Under the deal, Airbus will take ownership of the Belfast site that produces wings for the A220 as well as the production of wing components for the A320 and A350 at the Prestwick, Scotland site. Airbus will also take over the A220 mid-fuselage production in Belfast if Spirit is unable to find another buyer.
Additionally, the deal set out that Airbus will take over sites in North Carolina and France that produce the A350 fuselage sections and the Casablanca site that produces components for the A321 and A320 jets.