Boeing warns against U.S. Ex-Im Bank closure

LONDON Wed May 8, 2013 9:12am EDT

The Boeing logo is seen at their headquarters in Chicago, April 24, REUTERS/Jim Young

The Boeing logo is seen at their headquarters in Chicago, April 24,

Credit: Reuters/Jim Young

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LONDON (Reuters) - Closure of the U.S. Export-Import Bank would have very serious consequences for planemaker Boeing Co (BA.N) and hand a competitive advantage to its rival Airbus EAD.PA, a senior executive at Boeing's financing arm said.

Senate Banking Committee Chairman Tim Johnson had said on Tuesday Ex-Im Bank, which provides loans and guarantees to help U.S. companies export their goods, could be forced to stop operations in two months unless the Senate approves the nomination of Fred Hochberg as president of the government-run bank.

"It would not be politically sensible to have a unilateral disarmament of the Ex-Im Bank ... of course it would be very serious if they did," Kostya Zolotusky, managing director of capital markets development at Boeing Capital Corp, told reporters in London on Wednesday.

Zolotusky, whose unit arranges financing to support the sale of Boeing products and services, added that the political situation around the bank remained "heated".

The conservative free-market group Club for Growth tried last year to persuade Congress to shut Ex-Im Bank, which it views as government welfare for big corporations.

Delta Air Lines (DAL.N) last month sued the Ex-Im Bank over loan guarantees given to support purchases of Boeing jets by foreign airlines, citing the adverse economic effects of the practice on U.S. airlines and their employees.

"If Ex-Im is put out of business, Delta's competition will fly Airbus," said Zolotusky.

Boeing still expects buyers of commercial jetliners to draw more financing from capital markets in 2013 - via deals such as bond issues, as opposed to state-backed support - and Zolotusky reiterated a prediction that the value of jet sales would rise by 9.5 percent to a record $104 billion.

Capital markets deals will account for at least 15 percent of total jet financing in 2013, up from 10 percent last year and rising to up to 30 percent within five years, Zolotusky said.

Credit markets are filling a gap caused by diminished lending by export-credit agencies, which will finance only about 22 percent of total sales in 2013, down from 29 percent last year, he added.

(Editing by David Holmes)

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SeniorMoment wrote:
The Export-Import Bank is government welfare, but all of our major trading partners have equivalent institutions and ending it would quickly result in a decline in our already too low exports. If not already so though, its lending should be restricted to capital goods to avoid nations going into uncollectible debt over short term and chronic needs.

May 08, 2013 11:01pm EDT  --  Report as abuse
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