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Delta, Leader of the U.S. Airline Industry, Challenges Boeing and the Export-Import Bank
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Delta, Leader of the U.S. Airline Industry, Challenges Boeing and the Export-Import Bank

Apr 13 2014, 2:29pm CDT | by

Delta continues to show why it has become the de facto leader of the U.S. airline industry, not only for its superior financial performance but also for its willingness to take chances and to speak...

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15 weeks ago

Delta, Leader of the U.S. Airline Industry, Challenges Boeing and the Export-Import Bank

Apr 13 2014, 2:29pm CDT | by

Delta continues to show why it has become the de facto leader of the U.S. airline industry, not only for its superior financial performance but also for its willingness to take chances and to speak up – particularly in regard to the Export-Import Bank.

In the past year, Delta has led the Big Three airlines in financial performance, has on brought down jet fuel prices by buying its own refinery, has made a series of customer-focused improvements including snacks in coach and a commitment to completing all flights, and has not shied away from a fight against a government agency backed strongly by Boeing, an uber-company that is the largest U.S. exporter and that seldom loses a fight.

The bank’s charter expires Sept. 30. Congress is considering whether to reauthorize it. Last week, the Republican Study Committee considered whether to support the reauthorization. The bank devotes bout 40% of its resources to backing loans to buyers of Boeing jets by foreign carriers who compete with Delta and other U.S. carriers.

Last week, Delta spoke up again, declaring “Much like the bank’s review of widebody aircraft transactions, today’s panel discussion on reauthorization of the Export-Import Bank of the United States does not consider or address the harm Ex-Im financings for widebody aircraft do to U.S. airlines and their employees.”

“Delta continues to urge members of Congress to enact reforms that will ensure that the bank provides support to U.S. manufacturers without damaging the ability of U.S. airlines and their employees to compete in the global marketplace,” the carrier said, in a prepared statement. “It asked for “reforms in the 2014 Export Import Bank reauthorization that will protect U.S. airlines and their employees from continued, bank-induced, harm.”

The Air Line Pilots Association also spoke out last week, saying that while it does not oppose refinancing, members of the House Financial Services Committee, which oversees the bank, should make sure that it follows the law.

“The bank’s unnecessary financing of widebody aircraft provides state-sponsored foreign airlines, many of which have ample cash reserves and top tier credit ratings, an annual economic advantage of about $2 million per aircraft,” ALPA President Lee Moak wrote, in a letter to U.S. Rep. Jeb Hensarling, R-Texas, chairman of the committee, and U.S. Rep. Maxine Waters, D-Calif., ranking member.

Referring to the recent $162 billion in aircraft orders made by state-sponsored Persian Gulf airlines, Moak said, “Considering the huge number of aircraft on order by many of U.S. airlines’ foreign competitors, this advantage seriously harms U.S. airlines, which are not eligible for such market-distorting below-market bank financing.”

Financing Boeing aircraft accounts for an exceedingly large chunk of the Ex-Im Bank’s business. In fiscal 2012, its total exposure to outstanding financial commitments was $107 billion, of which 45% was for air transportation loans and loan guarantees, according to a lawsuit filed by Delta, ALPA and Hawaiian. All or nearly all of that involved helping customers at Boeing.

From fiscal 2001 to fiscal 2012, the bank approved more than $67 billion in loan guarantees to foreign carriers and international aircraft lessors, enabling foreign airlines to acquire more than 950 aircraft at below market rates, according to the lawsuit.

Emirates, Etihad and Qatar are all state-owned carriers capable of trading short-term profits for the potential of expansive air service, said Lee Moak, president of the Air Line Pilots Association, in a December interview with TheStreet. 

“All three airlines have a similar business model, and that is to take over all the international flying in the world,” Moak said. “They continue to add routes and order aircraft, and they are willing to do that at a financial loss.”

At the time, Boeing spokesman Tim Neale said the “Middle East carriers’ use of export credit has been below the historic global average,” and added: “The cost of government export credit doubled earlier this year and is now in line with what’s available from commercial lenders without government loan guarantees. In fact, U.S. airlines have been getting better rates this year in the commercial bond market than foreign airlines have been getting using government export credit.”

The Wall Street Journal reported last week that House Republicans are split over whether to reauthorize the bank, while Democrats want to keep it running beyond the Sept. 30 expiration of its charter.  Hensarling and Republican heavyweight Paul Ryan, oppose the re-authorization, while Democrats, some moderate Republicans and some large businesses support it, the newspaper said.

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was told t ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was br ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakyat ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Dat ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the south ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 milli ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Must ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 mi ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion K ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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