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Originally published June 14, 2014 at 8:11 PM | Page modified June 15, 2014 at 9:51 AM

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Boeing, Delta take opposite tacks on Ex-Im Bank

Boeing is a big beneficiary of the U.S. Export-Import Bank’s mission, but to Delta, it’s helping to finance foreign competitors. New pickle-maker shares something with its predecessor, Nalley’s.


By Seattle Times business staff

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I like how Delta is complaining about how their tax dollars are spent when they paid no income taxes in 2013.... MORE
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Last Wednesday morning, an important national policy issue was ripe for a public discussion in Seattle.

At a Hilton hotel near the airport, Boeing Commercial Airlines chief Ray Conner presented to a Seattle Chamber of Commerce audience his views on the future of Export-Import Bank of the United States.

Later that day, at the airport, visiting Delta Air Lines Chief Executive Richard Anderson was eager to talk about the Ex-Im Bank and give the counter-argument.

Unfortunately, only one side of the debate gets a public airing here.

Boeing insisted on keeping its event private. No press allowed.

In contrast, Anderson — the leader of a $40 billion business set to play an increasingly prominent role in this city’s future — freely expressed his passionate opposition to the Ex-Im Bank’s role in making loans that help Delta’s foreign overseas rivals buy planes from Boeing.

“The bank hurts Delta in a very serious way. Our tax dollars are used by the U.S. government to subsidize our foreign competitors, to take jobs from the U.S.,” Anderson said in an interview.

“We are opposed to the government picking and choosing between industries in our country,” he said. “Aviation and travel is a huge industry. We employ 80,000 people. We’re just as important as manufacturing.”

The debate — now a hot political issue in the other Washington — is over whether Congress should reauthorize the funding of the government-owned Ex-Im Bank.

Current authorization is set to expire in September and congressional Republicans are balking at renewal.

Boeing is by far the biggest beneficiary of the bank’s mission to promote U.S. exports by providing loans or loan guarantees to foreign companies so they can purchase U.S. goods. In the past five years Ex-Im has provided $40 billion worth of loans or loan guarantees to Boeing customers.

On the other hand, Delta and some other airlines are fuming at the Ex-Im Bank giving low-interest financing to their foreign competition.

“When you are buying a $150 million airplane and you get 2 percentage points less interest over a 12- or 15-year period, that can be the difference between profitability and not having a profit,” Anderson said.

He’s particularly galled that wealthy, state-owned foreign carriers such as Dubai-based giant Emirates have lined up for cheap Ex-Im-backed financing.

He recalls how Delta had a profitable business in India until Air India and other carriers bought Boeing widebody jets with Ex-Im backing and flooded the market with too much capacity.

“We pulled out of the market and reduced head count,” Anderson said.

Anderson blames the power of Boeing for the fact that Delta is the lone voice on this issue among the big U.S. carriers. He points out that when American Airlines was in bankruptcy, Boeing was the chair of its creditor committee.

Yet he says he’s not out to hurt Boeing’s business. Delta has nearly 600 Boeing airplanes in its fleet.

It ordered 100 single-aisle 737-900ERs in 2011 and is negotiating with Airbus and Boeing a new order for up to 50 widebody jets.

“There are not many customers in the world that buy a hundred 737-900ERs and pay cash,” Anderson said.

To ensure Boeing is not at a disadvantage versus Airbus, he wants the federal government to urgently negotiate with the European Union an end to the equivalent export-credit agencies there that support Airbus purchases.

In Washington state, where Boeing dominates the export-driven economy, political, business and labor support is heavily in the jet-maker’s corner, in favor of the Ex-Im Bank.

At Wednesday’s Ex-Im promotional event, Boeing’s Conner was backed by former Gov. Chris Gregoire, this year’s chairwoman of the Ex-Im Bank’s Advisory Committee.

You’d think Boeing would want to make the most of that local support.

The event was promoted by the Seattle chamber, but journalists who are chamber members and registered to attend were turned away at Boeing’s behest.

Ironically, Anderson’s other beef with the Ex-Im Bank is the secrecy of its transactions. He said that when Delta finances an airplane purchase, such details as the interest rate and the financing fees are filed publicly with the Securities and Exchange Commission. The bank, by contrast, does not disclose the terms of its deals, he said.

“If the U.S. government is going to subsidize people to steal the U.S. airline business, they ought at least to do it in the open,” Anderson said.

Boeing also might be advised to heed that call for more openness.

— Dominic Gates: dgates@seattletimes.com

Pierce County pickles picking up

Here’s a puzzle: Name a former Tacoma maker of pickles and other foods whose name has two different consonants, one of them doubled. Switch which consonant is doubled, then rearrange to make a new Tacoma pickle-maker.

One is Nalley’s, which shut its last Tacoma plant in 2011 after Pinnacle Foods bought the brand and moved production to the Midwest.

The other is Lynnae’s, which this month inked distribution deals with both Costco and with Kroger’s QFC and Fred Meyer chains. Though Lynnae’s Gourmet Pickles isn’t exactly a household brand name, its 31-year-old founder is moving up the food chain quickly.

Lynnae Schneller says she hadn’t noticed how her name resembles the former local manufacturer, “but I think we started the month after they closed.”

Using a recipe from Schneller’s grandmother, she and her sister-in-law Ally Cullinane began production in a local commercial kitchen and sold at farmers’ markets and small local stores. They expanded into some 2,000 specialty food stores and regional stores like PCC and Haggen’s.

Now, at a facility in Oregon that packs blueberries one month a year but was otherwise unused, they are producing four varieties and enough quantity to supply Kroger and Costco. Sales were $144,000 their first year, and Schneller says this year “is on track to be at least half a million.”

Although it’s their first food business, the partners turned away some large retailers because the terms offered didn’t leave much room for profit, says Schneller. But the big 29-ounce jars they are packing for the warehouse retailer mean there’s less glass, more pickles — “so we’re able to provide value and it works for us as well.”

— Rami Grunbaum: rgrunbaum@seattletimes.com



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