Court refuses to block US export credit to Air India

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A federal district court in Washington has denied a motion for a preliminary injunction designed to block loan guarantees offered by the US Export-Import Bank to support the purchase of Boeing jets by Air India.

Airlines for America (A4A), the US airline trade association formerly known as the Air Transport Association of America, sought the injunction as part of a lawsuit it filed in November against Exim Bank. In its complaint A4A claims that Exim Bank has ignored a statutory duty to consider the impact of its export credit on US industries and jobs. A4A argues that the favourable financing that Exim Bank offers foreign airlines - financing that is unavailable to US carriers i has allowed foreign rivals to add capacity and crowd out US airlines on some overseas routes.

A4A filed the motion for preliminary injunction, hoping before trial on the merits of its complaint, to block loan guarantees Exim Bank is offering so that Air India can buy three Boeing 777-300ERs and at least twenty-seven Boeing 787s.

Preliminary injunctions are granted when a party shows a likelihood of success on the merits and also shows that granting an injunction will have a more beneficial effect than denying it. This balancing of effects is often described in terms of whether denying an injunction will hurt the party seeking it more than granting an injunction will hurt the party opposing it.

This is the point on which U.S. District Judge James Boasberg ruled that A4A was not entitled to a preliminary injunction. Comparing the injury that its member airlines might suffer if Air India received export credit, with the injury to Boeing and Exim Bank if the court blocked that credit, the judge found that balancing the overall effects did not justify an injunction.

Boasberg noted that none of the airlines participating in this lawsuit currently offers a direct flight between the US and India and concluded the way they would be hurt by Exim Bank's export credit to Air India "is, at this stage, wholly speculative".

"The Court finds that this harm [to the airlines] would be far outweighed by the harm an injunction would likely cause the Bank and US manufacturers such as Boeing that rely on Bank-backed exports. A preliminary injunction is thus not warranted," the judge concluded.

Despite this initial loss, A4A said it remains confident that it will prevail when the case goes to trial.