Obama sets up sweet bank deals to aid Boeing, other manufacturers
The Export-Import Bank rule change is expected to help Boeing compete for new jet deal with United Airlines
Seattle Times aerospace reporter
One small, esoteric line in President Obama's speech Friday morning to Boeing workers in Everett quietly signaled a policy shift that could affect whether United Airlines orders Boeing jets later this year.
In a hotly contested three-way competition among Airbus, Boeing and Bombardier of Montreal, the Canadian government plans to offer financing to United if it buys the Bombardier CSeries model that competes against the Boeing 737-700 and the Airbus A319.
In that case, Obama has instructed the federal Export-Import Bank to offer matching financing to United to buy Boeing's 737s.
"We'll not sit back idly and let the sale go to the foreign competitor," said Ex-Im Bank chairman Fred Hochberg in an interview after Obama's speech.
The availability of cheap financing is often a crucial deciding factor in multibillion-dollar jet sales. Airlines routinely rely heavily on loans for the purchases.
Air India and Ethiopian Airlines, for example, bought 787 Dreamliners with Ex-Im financing. Obama cited Ex-Im support as a critical element in Boeing's sale of 230 jets to Lion Air of Indonesia, finalized last week.
Until now, the bank has backed loans to allow foreign airlines to buy Boeing jets, but has stayed out of jet sales to U.S. airlines.
In the Everett speech, Obama said he intends "to give American companies a fair shot by matching the unfair export financing that their competitors receive from other countries."
The specifics of what that meant were revealed in a White House fact sheet and in the interview with Hochberg and Bob Morin, who oversees the Ex-Im Bank's jet financing.
Hochberg said the Obama administration is broadening the sweep of the Ex-Im Bank, which is charged with supporting exports by offering loan guarantees so other countries can buy U.S. goods.
The White House fact sheet said that if foreign competitors are backed by export financing, then the bank is now ready to offer loan support for "domestic" sales.
Hochberg said orders will be considered "on a case-by-case basis."
In the aviation world, the policy change should have its first test this year in the scramble for the United single-aisle jet order — which could be for as many as several hundred jets.
United's fleet now consists of Airbus and Boeing jets, and one or both of those giant rivals will undoubtedly win the bulk of the order. Less certain is whether United will also buy Bombardier CSeries airplanes. Hochberg said Canadian government officials "have told me in no uncertain terms they are going to" offer financing to sweeten the deal.
"We've had a lot of conversations to request that they not do it in this market," he said. "But they fully intend to."
Morin said the Ex-Im Bank will be likely to jump in to support Boeing, and the corresponding export credit agencies in Britain, France, Germany and Spain will likely also weigh in to support Airbus.
And Hochberg said the aggressive stance of the Ex-Im Bank will go beyond the airplane business.
He said the bank has offered financing to GE, which is competing with Chinese companies to sell trains to Pakistan. The U.S. believes the competing companies' Chinese government backing is outside international rules.
"The president is sending a message," said Hochberg. "We will support U.S. manufacturers so they are not disadvantaged by foreign government financing of foreign exports."
Dominic Gates: 206-464-2963 or firstname.lastname@example.org