Demand for US Export-Import Bank funding is significantly down as airlines are able to find alternative financing solutions, according to a senior Ex-Im Bank executive.
Ex-Im Bank VP Transportation Division Robert Morin told ISTAT Americas 2013 attendees in Orlando Tuesday that fiscal 2012—which ran from Oct. 1, 2011 to Sept. 20, 2012—was a high water mark in terms of aircraft funding. The government agency provided commercial aircraft financing of around $11.5 billion.
A large proportion of Ex-Im Bank’s portfolio is loans and guarantees to ensure financing for sales of new US aircraft to foreign airlines, so the majority of the Bank’s loan guarantees go to Boeing customers.
In its 2013 fiscal year, Ex-Im expects that figure to be down. “We are seeing considerably lower demand this year and that’s because financial alternatives are quite robust so we are seeing much less demand and there are some airlines that are going cold turkey. Even though they may have used us in 2009, 2010, 2011 and 2012, this year they are saying ‘thanks, but no thanks.’”
The biggest variable in terms of how much financing Ex-Im will provide this year is with the leasing companies, Morin said. “We have a pretty good read on which airlines will come to us and what aircraft they will want. It’s the leasing companies that are an unknown—they may not come to us at all.”
Morin said Ex-Im is also “examining ways that we can better complement what the commercial markets do” by identifying potential market gaps.
Sequestration, US Congress’ mandatory federal budget cuts that went into effect March 1, does not impact Ex-Im Bank, Morin said. “We are self-sustaining and we cover our costs of doing business with the fees from airlines and leasing companies and so this time Congress did something right and decided that since we don’t take anything out, Ex-Im is outside of sequestration.”