Delta sues U.S. Export-Import Bank over aircraft subsidies

WASHINGTON Wed Feb 13, 2013 7:31pm EST

WASHINGTON (Reuters) - Delta Air Lines Inc (DAL.N) sued the Export-Import Bank of the United States on Wednesday, renewing a legal fight over subsidies that benefit aircraft exporters such as Boeing Co (BA.N) and by extension non-U.S. airlines.

The suit was filed in U.S. District Court in Washington, D.C. Joining Delta as plaintiffs were Hawaiian Airlines Inc and the Air Line Pilots Association, International.

The suit alleges that new Eximbank procedures for conducting economic analysis are illegal. It asks a judge to block them before they take effect in April.

Delta is the second-largest U.S. airline by operating revenue, while Boeing is the largest U.S. exporter.

Their subsidies dispute gave the U.S. Congress pause last year as it considered whether to renew the Eximbank charter, nearly leading to the shutdown of the bank.

Eximbank issues loan guarantees to non-U.S. customers of American aircraft-makers such as Boeing, but before it does so the bank must by law take into account whether the subsidies would harm other domestic companies.

Delta sued in November 2011, saying Eximbank's subsidy was arbitrary in a deal between Boeing and Air India. A judge ruled for the bank, and the case continues on appeal.

Meanwhile, Delta said it found new reason to sue under the law Congress eventually passed renewing the bank's charter. The law requires the bank to "develop and make publicly available methodological guidelines" for use in economic analyses.

Under newly published guidelines, at least 85 percent of aircraft-related transactions will be exempt from substantive analysis, the new suit alleges.

"The sheer number of aircraft transactions excluded by these screens is contrary to the bank's statutory mandates," it says.

An Eximbank spokesman had no immediate comment.

In court papers filed in December about the Air India deal, lawyers for the U.S. government defended the screening process the bank has for conducting a detailed analysis in only a fraction of transactions.

"The Export-Import Bank's financing determinations are complex, expertise-based policy judgments that are due heightened deference," the government lawyers said.

A message left with Boeing on Wednesday was not immediately returned.

The case is Delta Air Lines Inc, et al, v. Export-Import Bank of the United States, et al, U.S. District Court for the District of Columbia, No. 1:13-cv-192.

(Editing by Gary Hill; Editing by David Gregorio)

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