ATW Editor's Blog

The story behind the story of the Boeing-Delta Ex-Im bank spat?


There is a curious war of words going on between Boeing and Delta Air Lines over the US Export-Import Bank, as detailed in my colleague Madhu Unnikrishnan’s story.

In short, Delta CEO Richard Anderson has gone on a high-profile campaign against Ex-Im, saying its loan guarantees to non-US carriers such as Emirates to purchase Boeing widebodies provides an unfair advantage over US carriers.

Delta believes that these loan guarantees (and they are just that, not loans) for widebody aircraft should not be available to airlines that are credit worthy and/or receive assistance from their home governments.

Delta is not alone in its opposition to Ex-Im, which is sometimes referred to as “Boeing’s bank” because the majority of its guarantees go to airlines to raise funding to purchase Boeing aircraft. Pilots union ALPA is also campaigning against Ex-Im. The union says that three Middle East companies -- Emirates, Etihad Airways, and Dubai Aerospace Enterprise— received more than $7.9 billion in financing guarantees in 2013.

But the timing and ferocity of Boeing’s response to Delta’s complaints is unusual, in that the US manufacturer is essentially attacking a potential customer.

Delta is evaluating its next widebody fleet renewal options, with the Airbus A350, A330 and Boeing 787 and 777 potentially on the table. When decided, this will be a significant order and one with a top-line, high-profile airline.

So a letter from Boeing SVP-government operations Tim Keating to US House financial services committee chairman, Rep. Jeb Hensarling, disputing Delta’s argument point-by-point seems at odds with the sort of relationship you would expect to be developing between a manufacturer and an airline where a very large sale is up for grabs.

Keating writes, however, with a remark that could be seen as a dig at Delta’s profitability. “If Delta truly believes it is being competitively disadvantaged by Ex-Im transactions (and we do not believe that is the case, given its industry-leading 15% operating margins), then it should be working through the [Organization for Economic Cooperation and Development] toward a new international agreement on government export credit.”

Keating continues, “The most egregious claim that [Delta] makes is that it is ‘no more than speculation’ that Boeing needs Ex-Im to compete … If Ex-Im can no longer support their financing needs, they may have no choice but to buy from Airbus.”

As Madhu’s article points out, although Congress is in recess, this debate will become more intense when lawmakers return, as Congress will weigh Ex-Im’s reauthorization this fall.

I can’t help but wonder – pure speculation on my part– whether Boeing already knows where Delta’s new widebody check will be posted. And it’s not to a Seattle or Chicago address. No guarantees necessary.

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