Airbus, Boeing Hopeful on Return of State-Backed Plane Financing
January 22 2018 - 08:17AM
Dow Jones News
Robert Wall
DUBLIN--Boeing Co. (BA) and Airbus SE (AIR.FR) officials on
Monday signaled optimism that problems denting their access to
government-backed plane financing are nearing resolution.
The U.S. Export-Import Bank, or ExIm, which typically backs
Boeing plane exports is affected by the U.S. government's partial
shutdown absent a budget agreement. Even before the government
shutdown of all-but essential staff, ExIm had been restricted to
providing support to deals valued below $10 million because its
board lacked sufficient members to approve larger transactions.
The shutdown will likely temporarily slow the U.S. Senate's
ability to address other issues that have limited ExIm's support of
aircraft transactions, said Boeing Capital Corp. Vice President for
Regulatory Policy Daniel Da Silva. Still, he said that once
Congress resolves the budget issues, it can turn to approving ExIm
board members that are awaiting confirmation. Once those are in
place, the institution would be able to back larger deals
again.
Airbus also has been struggling to get backing from its
governments for export deals. France, Germany and the U.K. in 2016
suspended financial backing for the plane maker's exports amid
concern that Airbus had failed to fully disclose the use of
middlemen in certain transactions. The British Serious Fraud Office
also is investigating the issue.
Christin Lodberg, Airbus vice president for customer finance,
said "we will see the comeback fairly soon" of export credit agency
support. The scale, though, will likely be lower than in the past,
and the process for each application is expected to be more
cumbersome, she said at the Airline Economics Growth Frontiers
conference.
Thomas Kolberg, head of aircraft at the German export credit
agency Euler Hermes said at the event that the European financial
institutions were still establishing a process to assure themselves
of Airbus's compliance rules. "We are working quite hard with
Airbus to come to a solution," he said, adding that talks were
progressing.
Britain could be back in the business of backing Airbus deals
this year, said Pat Cauthery, head of aerospace at the U.K. Export
Finance agency.
Boeing and Airbus last year both delivered a record number of
planes. Though commercial financing for the planes was ample, both
Airbus and Boeing are eager to regain access to government-backed
credit as an insurance. Some financially weaker airlines need to
tap the government-backed financing or the plane makers
themselves.
Mr. Da Silva said the export credit also could be needed if the
market suffers a downturn. While export credit has fallen to less
than 10% of deliveries in recent years, during the last financial
crisis it spiked to as much as 30%, he said.
Airbus financed a handful of deals last year that lacked access
to commercial money, Ms. Lodberg said.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
January 22, 2018 08:02 ET (13:02 GMT)
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