US Ex-Im Bank Would Back Airbus Sales
The US Export-Import Bank would provide financing for exports of Airbus aircraft, provided they were assembled in the United States with sufficient content from domestic suppliers, the bank's head said on Wednesday.
"We're about US jobs," Ex-Im Bank President Fred Hochberg told the Reuters Aerospace and Defence Summit in Washington.
"We have no national treasures," Hochberg said, in a reference to Airbus rival Boeing. "Every company is a national treasure."
The bank, which supports loans for US manufacturers selling products to foreign companies, is at the centre of a bruising battle over whether Congress should renew its authority to operate, which expires on September 30.
About 46 percent of the bank's total financial exposure is for airliners made by Boeing, according to US Government Accountability Office figures.
Airbus is setting up a factory in Mobile, Alabama, to assemble commercial jets, and is due to begin making deliveries in 2016.
While Airbus intends to sell the aircraft to US airlines, there would be no restriction against US export credit support for foreign airlines buying US-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 US 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 labour 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 gas-turbine factory in North Carolina that competes with General Electric.
"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 US jobs. Other groups, including Delta Air Lines and the Air Line Pilots Association, say the US Ex-Im bank should reform its policies and stop offering low-cost credit to wealthy foreign airlines buying wide-body Boeing aircraft since they compete with US carriers on international routes, affecting jobs.
Hochberg dismissed such a compromise, saying the bank was at par with what others were doing and eliminating it would tilt the balance against US exporters, threatening 205,000 jobs.
He noted that reliance on US Ex-Im credit has declined this year as financial markets improved, in part because foreign airlines have access to other types of lending.
Foreign airlines have increasingly used bonds known in the US as enhanced equipment trust certificates (EETCs) to finance aircraft 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.