"Boeing’s recent assertion that the appetite of capital markets to fund airliner orders has increased comes as especially welcome news to manufacturers and their customers at a time when other sources of funding seem under pressure."
The Ex-Im Bank is the official export credit agency of the United States. It assists in the financing of US exports to companies that normally would not be able to get credit in the private sector. In addition the bank provides funds to fill gaps in financing, enabling the export of American goods and services to many markets.
Those in the US aviation industry have levied claims that the financing provided by the Ex-Im Bank amounts to anticompetitive assistance because US organizations are not eligible for the same financing (usually at a significantly lower rate). Fast growing carriers in Middle East and Asian countries are able to access relatively cheap financing, to purchase large US aircraft, which are then used to compete against US companies. It is claimed by US based groups and carriers that foreign companies have a competitive advantage provided by the Ex-Im Bank due to their cheap financing and lower cost structures (cheap labor).
I do not think there is much, if any impact on the US aviation industry due to the actions of the Ex-Im Bank. The majority of carriers receiving the benefits of the Ex-Im Bank pose no threat to US companies due to their inefficient locations relative to the US or because they are operated on routes us carriers do not/would not serve. Furthermore, the argument that because of the financing provided by the Ex-Im Bank US companies are at a disadvantage is false. US companies are able to access credit that is still much cheaper than what the Ex-Im is providing to foreign companies. Also keep in mind the Ex-Im is ensuring (in some part) orders for Boeing aircraft and other US goods continue and grow by tapping new markets, instead driving sales to countries (i.e. Airbus). By offering financing, the Ex-Im is supporting jobs in the aviation industry.
"US companies are able to access credit that is still cheaper than what the Ex-Im is providing to foreign companies" - are airlines included in this statement? If you happen to have the source for this, would you mind sharing it. It's an interesting piece of information.
ReplyDeleteI agree with your statement, that the Export-Import bank is supporting jobs in the industry. Also that the benefit to selling these products overseas exceeds any negative impact.
ReplyDeleteYes, not a problem. The linked paragraph above is the source. The managing director for capital markets development and leasing at Boeing Capital, Kostya Zolotusky, made this claim.
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