Ethiopian Air Says ExIm Saga Risks Boeing Orders

Ethiopian Airlines told Boeing that the closure of the US Export-Import Bank raised concerns about the airline's ability to take delivery of Boeing aircraft already ordered and would force it to reevaluate future orders.

Boeing, which is fighting to get the trade bank reauthorised by Congress, released a letter from the airline, saying it had 21 aircraft on order that had not been delivered with a total list price of more than USD$2.5 billion.

Boeing, which had offered buyers financing backed by ExIm, cited US Commerce Department data which shows that orders of that magnitude in the aerospace sector would be associated with 14,367 jobs at Boeing, its suppliers and in surrounding communities.

Ethiopian Airlines chief executive Tewolde GebreMariam told Boeing in the letter dated October 3 that uncertainty about the future of the bank had put Boeing "at a competitive disadvantage relative to manufacturers in other countries that continue to support their export credit agencies."

Unless Congress revived the bank, Ethiopian Airlines would have to reevaluate future US aircraft orders at a time when it is finalising plans to double its fleet to 150 aircraft by 2025, he said, suggesting it could turn to Airbus instead.

Boeing, ExIm's biggest beneficiary with USD$7 billion worth of loans and guarantees last year, released a similar letter last week from South Africa's Comair that involved USD$1.1 billion in aircraft orders.

Boeing has also lost two satellite orders since the bank's charter lapsed at the end of June, halting its lending, loan guarantees and trade insurance.

Boeing spokeswoman Kate Bernard said the company had heard similar concerns from other airlines and could see more letters in coming days.

"Customers have come to us with their concerns and they want to know what they can do to help," she said, when asked if Boeing had orchestrated a letter-writing campaign.

A small group of Republicans have targeted the bank as an example of "corporate welfare." Supporters say it allows US companies to compete for orders overseas, and actually produced USD$675 million in revenues for federal coffers last year.

Boeing and other ExIm backers hope to resuscitate the bank in coming weeks, with a group of House Republicans and Democrats aiming to put the issue to a vote through a rarely effective procedural manoeuvre known as a discharge petition.

Ethiopian's GebreMariam told Ray Conner, who heads Boeing's commercial aircraft business, that the two companies had been doing business for 70 years but continued uncertainty about the bank's future was "an ongoing source of concerns and frustration."

Having access to ExIm financing allowed the airline to fund large and long-term acquisitions and borrow in its own currency, which lowered the exchange rate risk, he said, adding that the airline had never defaulted on any ExIm guarantees.