Airlines may be forced to look beyond Europe, which has long been a major source of aircraft financing, to bankroll the US$100 billion worth of aircraft deliveries next year, Boeing said yesterday. 'The economic pressure in Europe is very severe now and puts pressure on aircraft financing,' said Kostya Zolotusky, the managing director of capital markets development at Boeing. Despite the looming challenges faced by European banks, which account for 80 per cent of bank facilities in global aircraft financing, the demand for new airplanes still remained buoyant, Zolotusky said. Aircraft deliveries would reach a record next year, following the US$77 billion in deliveries this year. The percentage of bank facilities to total aircraft financing will shrink to 20 per cent next year from 25 per cent, Zolotusky said. To make up for the shortfall, the percentage of financing through capital markets, such as bond issuance, would increase to 15 per cent next year from 4 per cent this year. Only mature and financially strong carriers can tap into the capital markets for funding as investors are dispassionate and only invest where they see a profit. 'It's unemotional; there is no relationship lending,' Zolotusky said. Cathay Pacific Airways issued HK$658 million worth of notes at a coupon of 3.9 per cent on October 17, the first issue under its US$2 billion medium-term note programme. Low interest rates have brought the cost of aircraft financing to a historic low to account for only 4.5 per cent of airlines' operating costs, compared with 9 per cent previously. But interest rates are volatile, especially when the Basel III accord is poised to tighten bank lending. Chinese banks, which are the emerging lenders in aircraft financing, would be 'lucky' to retain their lending volume to airlines next year because of the tightening monetary policy, Zolotusky said. But, once the inflation on the mainland is contained and Beijing relaxes its lending policies, he said Chinese banks would capture the opportunities from the pullback of European banks.