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US Export-Import Bank To Back Domestic 737 Sales  
User currently offlineStitch From United States of America, joined Jul 2005, 30886 posts, RR: 87
Posted (3 years 3 months 4 days 15 hours ago) and read 3885 times:
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While it has long backed foreign sales of Boeing aircraft, the Export-Import Bank will now provide loan guarantees on sales of 737 family aircraft to United States flag carriers to combat the CS100 and CS300, whose sales also receive loan guarantees by the Canadian Government.

http://seattletimes.nwsource.com/htm...erospace/2015109271_cseries21.html

What is interesting is that the US and EU have had a "gentleman's agreement" that they don't provide loan guarantees for their domestic carriers. So now that the US is backing the 737, this would give the EU "permission" to back A320 sales to airlines like BA, AF, LH and IB.

[Edited 2011-05-21 13:33:43]

8 replies: All unread, jump to last
 
User currently offlineblueflyer From United States of America, joined Jan 2006, 3967 posts, RR: 2
Reply 1, posted (3 years 3 months 4 days 14 hours ago) and read 3734 times:
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Cue lifetime employment for WTO-experienced lawyers.


I've got $h*t to do
User currently offlineAA737-823 From United States of America, joined Mar 2000, 5767 posts, RR: 11
Reply 2, posted (3 years 3 months 4 days 14 hours ago) and read 3695 times:

This is more economic insanity from Washington.
If the CS products are better, let airlines buy them. Don't artificially prop up the best-selling jetliner of all time. If Boeing needs to adapt, let them adapt.

Or just outsource it to China/Korea/Japan/Italy as with the 787. That did WONDERS for the US economy... and for production reliability.


User currently onlinetrex8 From United States of America, joined Nov 2002, 4747 posts, RR: 14
Reply 3, posted (3 years 3 months 4 days 12 hours ago) and read 3585 times:
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Quoting AA737-823 (Reply 2):
This is more economic insanity from Washington.
If the CS products are better, let airlines buy them. Don't artificially prop up the best-selling jetliner of all time. If Boeing needs to adapt, let them adapt.

The original aim of the ExIm Bank was not to undercut competitors and push a US product which may be inferior to the foreign competition but to allow foreign customers access to financing by guaranteeing the loan and providing rates which would otherwise not be available to them which may then allow the US product to be purchasable eg if you were eg Third World Poverty Stricken National Airline you won't get the same rate on financing from international lendors as say Asian Tiger National Airline or they won't even lend the money unless they have ExIm Bank guarantees. That 1 or 2 or even more % difference in interest or the guarantees may be what makes or breaks the sale. I doubt any airline has ever purchased an American over a European plane or vice versa simply because of the ex im financing available as the other side will always offer similar terms.
I guess the real issue is are US legacy carrier in such deep financial straits they need the USG to guarantee the loans!


User currently offlinepar13del From Bahamas, joined Dec 2005, 7124 posts, RR: 8
Reply 4, posted (3 years 3 months 4 days 12 hours ago) and read 3467 times:

Quoting Stitch (Thread starter):
What is interesting is that the US and EU have had a "gentleman's agreement" that they don't provide loan guarantees for their domestic carriers. So now that the US is backing the 737, this would give the EU "permission" to back A320 sales to airlines like BA, AF, LH and IB.

The article states that the US and the EU nations who have this "gentlemans agreement" have already decided to set it aside if the C-Series a/c is up in a 3 way competition with the A320 and 737, in essense they are colluding to prevent another competitor to preserve their version of free and open competition.

In my opinion, this is the first salvo in the upcoming war where the "supporters" of Boeing and Airbus will get together to prevent any other nation developing an aerospace industry which will produce products that compete against Boeing and Airbus.
I guess their visions is that other nations industry shoudl be used to aid Boeing and Airbus as in make parts, but not full frames.

Interesting years ahead.


User currently offlinemdword1959 From , joined Dec 1969, posts, RR:
Reply 5, posted (3 years 3 months 4 days 11 hours ago) and read 3405 times:

This was inevitable since the standards for providing ECA financing were bastardized long ago. Both the US Air Transport Association and several European airlines have complained to their respective governments that lower-cost Export Credit Agency (ECA) financing available to airlines in the UAE (and other "rich" countires not the intended beneficiaries of ECA financing) for aircraft purchases from both Airbus and Boeing (comprising 30% of their overall deliveries), and unavailable to airlines in the United States, France, Germany, Spain, and the UK for their purchases from the two major airframers, creates "a major distortion of competition."

[Edited 2011-05-21 17:33:44]

User currently offlinesxf24 From United States of America, joined Aug 2007, 1260 posts, RR: 0
Reply 6, posted (3 years 3 months 4 days 11 hours ago) and read 3353 times:

Quoting AA737-823 (Reply 2):
If the CS products are better, let airlines buy them. Don't artificially prop up the best-selling jetliner of all time. If Boeing needs to adapt, let them adapt.

Export Development Canada is supporting very low-cost financing for the C-Series. It's not really fair for Boeing (or Airbus) to be selling a 737 or A320 against a CS product that costs less because the government is guaranteeing the loan. Further, without government subsidies, the C-Series wouldn't sell at all (not that its sold many) because there's no desire from the market to provide commercial financing.


User currently onlinetrex8 From United States of America, joined Nov 2002, 4747 posts, RR: 14
Reply 7, posted (3 years 3 months 4 days 11 hours ago) and read 3333 times:
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Quoting sxf24 (Reply 6):
Export Development Canada is supporting very low-cost financing for the C-Series. It's not really fair for Boeing (or Airbus) to be selling a 737 or A320 against a CS product that costs less because the government is guaranteeing the loan

Is that for any C series sale or only for exports though?

I can see ECA financing should not be available for airlines from "developed" nations.


User currently offlinepar13del From Bahamas, joined Dec 2005, 7124 posts, RR: 8
Reply 8, posted (3 years 3 months 4 days 11 hours ago) and read 3317 times:

Quoting sxf24 (Reply 6):
Further, without government subsidies, the C-Series wouldn't sell at all (not that its sold many) because there's no desire from the market to provide commercial financing.

That is why it is fair for the Canadian government to provide support to allow the a/c to come to market and compete. If the inability to obtain financing is removed, airlines can compare all three products on their own merit. The financing the Canadians are providing is quite likely "risk financing" that does not means it is below market rate.
I look at it from the perspective of breaking the bank cartels where they only finance the purchase of Airbus or Boeing a/c, if they do the same for the C-Series the playing field would be level.


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