Ex-Im Support of Competitors 'Hurts,' Says Delta CEO

AIN Air Transport Perspective » April 16, 2012
Delta Air Lines CEO Richard Anderson
Export-Import Bank loan guarantees to foreign airlines 'really hurt' Delta, CEO Richard Anderson told the U.S. Chamber of Commerce Aviation Summit in Washington, D.C. (Photo: Bill Carey)
April 16, 2012, 10:00 AM

Calling it an issue that “really hurts,” Delta Air Lines CEO Richard Anderson used a keynote speech to the U.S. Chamber of Commerce in Washington, D.C., to explain why Delta opposes U.S. Export-Import Bank loan guarantees that help foreign carriers buy Boeing airplanes.

Addressing the chamber’s annual aviation summit April 12, Anderson said Ex-Im Bank financing support helps foreign carriers acquire aircraft on more favorable loan terms than Delta can obtain on the commercial market, placing Delta at a competitive disadvantage. “We spent $300 million to buy two widebody airplanes to serve India, and a government-sponsored carrier comes in with Ex-Im Bank [support] and basically takes you out of the market because they’re pricing $300 or $400 a ticket below you,” Anderson said. “I’d love for somebody to give me a good answer to that.”

In 2006 the Ex-Im Bank made preliminary commitments of nearly $5 billion in loan guarantees to Air India and Air India Charters to support the sale of Boeing 777s and 737-800s. Ex-Im converted them to final commitments on four occasions from 2008 through 2011, the last supporting the purchase of 777-300ERs and 787 Dreamliners.

Last November airline trade organization Airlines for America (A4A) sought an injunction in U.S. District Court for the District of Columbia to stop $3.4 billion in preliminary and final Ex-Im Bank loan guarantees to Air India to acquire 30 aircraft, including 27 Dreamliners. Though the court denied the injunction in January, the dispute spilled over into Congress, which must reauthorize the federal export credit agency by May 31. The Obama Administration wants to reauthorize the Ex-Im Bank for four years and increase its lending authority by $40 billion to $140 billion. However, the Senate voted down the proposed reauthorization in March. Democratic and Republican leaders in the House were negotiating a compromise bill that could see a shorter reauthorization with restrictions placed on the bank.

The Ex-Im Bank held its own annual conference April 12 in Washington. In opening remarks there, Ex-Im Bank chairman and president Fred Hochberg called on Congress to pass the reauthorization, urging members to consider the advantage foreign companies backed by their respective governments would enjoy should the U.S. fail to act.

Anderson said Delta has focused its attention on revising the Ex-Im Bank’s practices regarding widebodies. “We don’t object to that kind of financing for manufacturers outside of airplanes. We don’t object to that financing on narrowbody airplanes,” he said. “What we propose is transparency. Do analysis on what the impact is and understand what the challenge is, but please don’t dismiss the challenge that I’m telling you we have as the largest international airline in the United States.”

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Donald Thompson
on April 16, 2012 - 4:17pm

One: Check the Fuel prices for Domestic (Air India) versus International Carriers.
Two: Compare labor rates for operations and maintenance.
Three: Check on ticket taxes and government Subsidies.
Four: Stay out of Politics and focus on running your company.

Does that explain it?

No Avatar
Donald Thompson is ignorant
on April 18, 2012 - 6:42am

One: American taxpayers subsidize a loan to foreign carriers which in turn reduces American jobs.
Two: Anderson is focused on running his company, hence the concern on EX IM
Three: You are ignorant

No Avatar
Don Thompson
on April 20, 2012 - 1:26pm

One: What aircraft do you think that the Ex Im Bank loans helps these foreign airlines purchase? The Ex Im bank does not just give forreign carriers money for thier operations etc.
Two: What country and what OEMS and subcontractors benifit more as a result of the Ex Im Loans?
Three: How many more jobs and hence a tax base is created by those OEM's and contractors versus those created by Delta Airlines.

Four: I would rather be ignorant than a short sighted fool. Ignorance allows room for learning. Fools will always be fools! So you want to tell the world who you are!

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