Delta Air Lines maintains its objections to the financial support for widebody aircraft from the US Export-Import Bank (Ex-Im), as hearings are set to begin on the reauthorisation of the lender’s charter.
“Our position has been unequivocal and unchanged from the beginning,” says Richard Anderson, chief executive of the Atlanta-based carrier, at an Aero Club of Washington luncheon in Washington DC on 24 June. “Our position focuses on widebody airplanes.”
A Wall Street Journal article the same day claimed that he was planning to lessen objections to Ex-Im financial support for widebody aircraft.
Delta has long sought to stop Ex-Im loan guarantees for widebody aircraft from Boeing to state-supported carriers abroad, for example in Asia and the Middle East. Pending lawsuits by the airline, as well as the Air Line Pilots Association (ALPA) and Hawaiian Airlines, cite negative economic consequences for US carriers.
Anderson says that “huge over capacity” in a number of city pairs and an orderbook for widebody aircraft from certain carriers that has “no basis in economic demand” are examples of these negative consequences.
“If a state-owned, state-subsidised airline can access private capital markets, we shouldn’t be distorting capital costs in a capital intensive business,” he says. “Our focus is on widebody financing and widebody financing must be reformed.”
Ex-Im support for narrowbody aircraft does not concern Delta.
“We don’t see, really, much competitive harm in our network from narrowbodies and we’re trying to be responsible in terms of where out criticisms lie,” says Anderson.
He adds that the home market rule bars export credit financing for narrowbodies to airlines in the manufacturers home markets, for example France and the USA, with limited exceptions.
The focus on reforming Ex-Im comes at the beginning of what is expected to be a tough reauthorisation fight. The House Financial Services committee has scheduled the first hearing in the process for 25 June, just a little more than three months before the bank’s charter expires on 30 September.
“Without meaningful reform, we are opposed to reauthorisation,” says Anderson. He will participate in the hearing on 25 June, he adds.
Ex-Im has become a partisan issue in Congress. Republicans are increasingly opposed to its loans to foreign companies while Democrats see it as an export driver and job creator.
“I think Ex-Im bank is one [thing] that government does not have to be involved in,” said incoming House majority leader representative Kevin McCarthy, a Republican from California, on the Fox News Sunday television show on 22 June. “The private sector can do it.”
McCarthy will be the second most powerful Republican in the body when he assumes the position in July.
Aircraft lending is a large part of Ex-Im’s business. It provided about $8 billion in loan guarantees for aircraft in he fiscal year that ended 30 September 2013. This is equal to about 30% of the more than $27 billion total that it lent during the year.
“If Ex-Im is not reauthorised, Boeing will be placed at a competitive disadvantage to Airbus and other airplane manufacturers all of whom have government export credit agencies to support customer financing,” says Chicago-based Boeing. “We hope… that Congress begins to take steps soon to alleviate customer anxieties about the bank.”
Ex-Im declines to comment but cites the fact that it has been reauthorised by majorities from both parties since its creation in 1934.