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Aviation History
2001
2001 - 0125.PDF
Credit AIRCRAFT FINANCE With the opening of Europe's investment markets for raising aircraft finance, competition with the USA is due to hot up ANTHONY O'CONNOR/LONDON THE DISAPPEARANCE of the mainstay finance alternatives for many carriers has meant increased reliance on government-backed aircraft financing deals. "As fewer financing alternatives are available, that puts more pressure on those that remain," says Robert Morin, vice president of the transporta tion division of the US Eximbank, Washington DC. "The market brings to us the deals that it can't do." With distinctly polarised competition between Airbus and Boeing in the large (100- plus seats) commercial aircraft market, a scratch for. earners beneath the surface reveals that the government plays a vital role in financial support. The airline industries in the USA and Europe are fully deregulated and open to competition. As such, they should be free from government influ ences. Nevertheless, the government plays as forceful a role as ever in aerospace and aircraft sales, benefiting many deregulated airlines. The way aircraft are financed depends large ly on trends in banking and finance markets. CALL FOR MODERNISATION There are now calls to modernise, however, the principal agreement on which the USA and the Europeans provide support for aircraft sales. The Large Aircraft Sector Understanding (LASU), which dates back to the mid-1980s, defines the accepted code of practice of how air craft are financed with support of the export creditagencies. While the US perception is that the launch subsidies given to the Airbus A3 80 programme are intrinsically unfair, there has been similar transatlantic debate over how far the USA and the Europeans will go to support sales of their aircraft. In Europe, Airbus sales are supported by the export credit agencies (ECAs) of the Export Credit Guarantee Department (ECGD) in the UK, Coface of France and Hermes of Germany. The Europeans take a mixed portfolio approach I The Europeans take a mixed portfolio approach to the airlines for which they will provide export credit cover. They have supported developing carriers like Croatian Airlines FLIGHT INTERNATIONAL 9 - 15 January 2001 31
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