A day before more than 600 supporters of the Export-Import Bank arrive in Washington to make the case for the bank, the Air Line Pilots Association (ALPA) urged Congress in a letter to change Ex-Im Bank rules so that it doesn’t aid “state-owned, state-supported, and credit-worthy foreign airlines.”
ALPA called for “targeted and meaningful reforms to the Export-Import Bank’s widebody aircraft lending practices.”
The Export-Import bank provides loans and loan guarantees to foreign purchasers of U.S. goods. In fiscal year 2014, the bank arranged $20.5 billion in financing which it said supported more than 164,000 American jobs.
Congress last year extended the bank’s charter until June, instead of giving it the five-year reauthorization it sought.
Monday’s letter from ALPA president Timothy Canoll made arguments similar to those used by Delta Air Lines CEO Richard Anderson about the bank’s aid to Emirates and other Persian Gulf-based carriers.
Canoll said “foreign airlines can use Bank-financed aircraft to compete directly with U.S. airlines on international routes. They can flood the market with excess capacity and drastically undercut market-driven pricing.”
The result is that U.S. airlines “are at a competitive disadvantage and our industry’s workers have already experienced job loss.”
Among the loan guarantees the Export-Import Bank made in 2014 was one for $284 million to help finance Emirates’ purchase of three Boeing commercial aircraft.
In a response to the ALPA letter, Boeing spokesman Tim Neale made these points:
“U.S. airlines are getting the cheapest financing available for airplane purchases – far cheaper than foreign airlines that are utilizing Ex-Im loan guarantees.”
“There is absolutely no evidence to support claims that Ex-Im and other government credit agencies have created an overcapacity situation for the global airline industry. Global air travel is growing, and airplane load factors are at record highs, especially in regions like Asia with strong economic growth and a growing middle class.”
If Congress prohibited Ex-Im financing for Boeing aircraft, it would “give a big advantage to the aerospace industries of Europe, Canada, China and Brazil.”
Last year the bank’s future was put in doubt after newly elected House Majority Leader Kevin McCarthy surprised some observers by saying that he’d allow its charter to expire “because it’s something that the private sector can be able to do.”