Reuters logo
REUTERS SUMMIT-U.S. Ex-Im bank would back Airbus sales -Hochberg
September 10, 2014 / 10:57 PM / 3 years ago

REUTERS SUMMIT-U.S. Ex-Im bank would back Airbus sales -Hochberg

(For other news from the Reuters Aerospace and Defense Summit, click on www.reuters.com/summit/Aero14)

By Alwyn Scott and Tim Hepher

WASHINGTON, Sept 10 (Reuters) - The U.S. Export-Import Bank would provide financing for exports of Airbus Group jetliners, provided they were assembled in the United States with sufficient content from domestic suppliers, the bank’s head said on Wednesday.

“We’re about U.S. jobs,” Ex-Im Bank President Fred Hochberg told the Reuters Aerospace and Defense Summit in Washington.

“We have no national treasures,” Hochberg said, in a reference to Airbus arch rival Boeing Co. “Every company is a national treasure.”

The bank, which supports loans for U.S. manufacturers selling products to foreign companies, is at the center of a bruising battle over whether Congress should renew its authority to operate, which expires on Sept. 30.

About 46 percent of the bank’s total financial exposure is for jetliners made by Boeing, according to U.S. Government Accountability Office figures.

Airbus is setting up a factory in Mobile, Alabama, to make commercial jets, and is due to begin making deliveries in 2016.

While Airbus intends to sell the aircraft to U.S. airlines, there would be no restriction against U.S. export credit support for foreign airlines buying U.S.-manufactured Airbus planes, Hochberg said.

“To the extent that the Airbus plane is actually made here, we could support those exports that are made in the United States,” he said.

Airbus has said the U.S. supplies more than 40 percent of its aircraft-related purchasing, including engines.

Hochberg said there were no minimum content requirements, but that the Ex-Im bank looks closely at content and labor in product before deciding on support.

He said export-credit agencies in other countries were often surprised to learn the Ex-Im bank will support foreign companies manufacturing in the United States, and does not pick companies to support as “champions.”

For example, the bank supplies export financing for the customers of a Siemens AG gas-turbine factory in North Carolina that competes with General Electric Co.

“We treat Siemens and GE as one and the same,” he said. “We have no preference for one over the other. Siemens employs people in America (and) to the extent that the product is made here we support it.”

Boeing is among those lobbying to have the bank’s charter renewed, saying it essential to support U.S. jobs. Other groups, including Delta Air Lines Inc and the Air Line Pilots Association, say the U.S. Ex-Im bank should reform its policies and stop offering low-cost credit to wealthy foreign airlines buying widebody Boeing aircraft since they compete with U.S. carriers on international routes, affecting jobs.

In the Reuters interview, Hochberg dismissed such a compromise, saying the bank was at par with what others were doing and eliminating it would tilt the balance against U.S. exporters, threatening 205,000 jobs.

He noted that reliance on U.S. Ex-Im credit has declined this year as financial markets improved, in part because foreign airlines have access to other types of lending. Ex-Im loans to mining and oil-and-gas companies also have dropped, he said.

Foreign airlines have increasingly used bonds known in the U.S. as enhanced equipment trust certificates (EETCs) to finance jet purchases. EETCs, which offer lower interest rates than the Ex-Im bank now provides, give lenders the right to seize aircraft quickly if a carrier goes bankrupt.

The EETC market is a bigger factor in lowering borrowing costs for foreign airlines than the Ex-Im Bank, Hochberg said.

Also, “airlines are better able to tap into conventional bank lending than they were a year or two years ago,” he added.

Follow Reuters Summits on Twitter @Reuters_Summits

For more summit stories, see Reporting by Alwyn Scott, Tim Hepher and Jeffrey Dastin; Editing by Jonathan Oatis and Andre Grenon

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below