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enilria
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DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 3:58 pm

http://www.forbes.com/sites/lorentho...ndermines-boeing/?partner=yahootix

I guess to some extent I give them credit for trying anything to advantage themselves, but I'm not a fan of being hypocritical.

"The aim of Delta’s campaign is to prevent the Export-Import Bank, an independent federal agency, from providing financing for foreign purchases of widebody airliners built by Boeing. Delta management says such planes can be used to compete against U.S. carriers on international routes, and that a government agency should not be helping foreigners to do that."

"First of all, Delta’s concern about the market-distorting effects of aircraft export credits seems a bit disingenuous, since it is one of the biggest recipients of such credit in the world. The company has tapped billions of dollars in financing from the export credit agencies of Brazil and Canada to purchase hundreds of aircraft made in those countries. "


It should be pointed out that DL routinely uses the RJs they purchased using Canadian EXIM financing to compete with Air Canada in trans-border markets.
 
ozglobal
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 4:10 pm

This is not to mention the other dirty trick many 'foreign' (to the US) carriers play: providing a far better standard of product...  
When all's said and done, there'll be more said than done.
 
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mayor
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 4:27 pm

Quoting enilria (Thread starter):

It should be pointed out that DL routinely uses the RJs they purchased using Canadian EXIM financing to compete with Air Canada in trans-border markets.

And, as you quoted above, DL is specifically talking about financing to purchase widebody a/c, not regional jets. I doubt if DL using RJs, transborder, is really hurting AC all that much.
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
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enilria
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 4:40 pm

Quoting ozglobal (Reply 1):
This is not to mention the other dirty trick many 'foreign' (to the US) carriers play: providing a far better standard of product...  

Well, that should simply be outlawed.  
Quoting mayor (Reply 2):
I doubt if DL using RJs, transborder, is really hurting AC all that much.

Well, they compete head to head on the same routes. I'd say that airlines using EXIM financing of Boeing jets aren't hurting Delta all that much. LOL.

Delta is in a JV with KLM where it shares costs and revenues. KLM aircraft are financed with EXIM financing, so Delta receives the benefit of that financing on its own flights. I guess they can make the argument of "we do it because everybody else does, so we have to be able to compete". It's not a great argument, though.
http://www.ca-cib.com/news/major-dea...loses-exim-refinancing-for-klm.htm

Many of the carriers involved have Delta codes on their planes.
http://www.aircrafteconomics.com/Art...-Air-closes-ExIm-deal-for-777.html

Quoting mayor (Reply 2):
And, as you quoted above, DL is specifically talking about financing to purchase widebody a/c, not regional jets.

They kind of have to limit themselves to only complaining about widebody jets for obvious reasons.
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 4:50 pm

Quoting enilria (Reply 3):
They kind of have to limit themselves to only complaining about widebody jets for obvious reasons.

Or maybe that's just where it hurts the most......on long haul, widebody flights. Besides, not ALL of the RJs that are used were purchased by DL but by the contracting carriers.
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 5:20 pm

Quoting mayor (Reply 4):
Quoting enilria (Reply 3):
They kind of have to limit themselves to only complaining about widebody jets for obvious reasons.

Or maybe that's just where it hurts the most......on long haul, widebody flights. Besides, not ALL of the RJs that are used were purchased by DL but by the contracting carriers.

What is your defense of JV participation by Delta using planes financed with EXIM loans? The world is so global now for the legacies, there is no moral high ground.

I think if the WTO outlawed all EXIM financing that might be OK, although it would lead to less new aircraft. If only the U.S. does it then it doesn't make much competitive sense.
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 5:25 pm

Delta has no choice - how are they going to compete with other airlines like JetBlue who may not care about Exim financing?

Lufthansa has made similar complaints:

http://presse.lufthansa.com/fileadmi...ief-October-2010-ExportCredits.pdf

This is hardly limited to Delta.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
PPVRA
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 5:39 pm

Let's take a look at some of the points the article makes:


"Second, the Export-Import Bank doesn’t give subsidized loans to anybody for aircraft purchases. It can’t afford to because Congress requires it to be self-sustaining, so it must impose fees on users of its services to cover operating costs and loan reserves. Congress also prohibits it from competing with commercial lenders, which is why the foreign buyers who utilize Ex-Im credit typically are unable to access private-sector financing. The number of companies in that predicament tends to swell when economic conditions are weak and credit dries up, but there are also many carriers in countries with unstable economies or political systems who cannot obtain private financing for their aircraft purchases."

Yeah, they can't access private financing because they don't have the credit rating! The only one misleading anybody here is the author.


"Third, the reason Delta can’t get the same loan terms as some foreign carriers isn’t because of Ex-Im programs, it’s because Delta has a low credit rating. Under the most recent Aircraft Sector Understanding agreed to by U.S. and European nations, it costs borrowers significantly more to use government export credits for their aircraft purchases than it would to use commercial financing, but borrowers with good credit ratings like Southwest Airlines will always get better terms than borrowers with inferior ratings. So Delta’s real problem is its junk-bond credit rating, and what it is actually complaining about is the normal functioning of market forces — which favor companies with good credit histories."

If that was true, nobody would ever go to Exim for a loan.


"Finally, the idea of joining with European nations to abolish export credits for airliners is impractical because new aircraft exporters such as Brazil and China are entering the global market who would not be party to any such agreement."

Which is why Delta is focusing on widebodies first.


"Those countries already offer much more liberal credit terms to potential importers of their goods, and would quickly take market share from U.S. producers of aircraft if given the opportunity to tip the scales with predatory financing."

Another reason to try to negotiate a ban on these credit agencies: it hurts US and EU exports.


"It appears the company is trying to improve its position in the marketplace by leveraging conservative values it doesn’t even share. "

Why is the author trying to politicize the issue?


"The reason Boeing taps Ex-Im financing so frequently is because it makes the most expensive capital goods that the U.S. exports, and those goods are in demand in many places where private-sector lenders are reluctant to extend credit."

Because of credit risk. . .


" If Ex-Im programs didn’t exist, those buyers would still obtain planes, but they would all be purchased from Boeing’s main rival using European export credits — dealing a devastating blow to America’s biggest exporter."

The author already forgot about the part that involves the US and the EU he mentioned earlier in the article?


"Because the bank’s lending for widebody airliner exports has essentially a zero default rate, it is the most stable part of the institution’s loan portfolio. The low risk associated with financing aircraft exports enables the bank to take bigger risks in loaning to small businesses that wish to export. "

People used to say similar things about the Housing market.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
PPVRA
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 5:50 pm

Quote:
"Third, the reason Delta can’t get the same loan terms as some foreign carriers isn’t because of Ex-Im programs, it’s because Delta has a low credit rating. Under the most recent Aircraft Sector Understanding agreed to by U.S. and European nations, it costs borrowers significantly more to use government export credits for their aircraft purchases than it would to use commercial financing, but borrowers with good credit ratings like Southwest Airlines will always get better terms than borrowers with inferior ratings. So Delta’s real problem is its junk-bond credit rating, and what it is actually complaining about is the normal functioning of market forces — which favor companies with good credit histories."

To take from the Lufthansa press release. .

"Emirates, by contrast, pays merely 3.5 percent interest for financing over 12 years through export credit guarantes. . "

Emirates should have little to no problem in getting very good private sector financing. . . yet they still went with the, yes, sweetheart loans provided by the likes of the Exim bank.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 6:02 pm

Quoting enilria (Reply 3):
They kind of have to limit themselves to only complaining about widebody jets for obvious reasons.

Which is silly since they have a number of widebody a/c that were actually purchased from Airbus, now that they are one company I'm sure they can look up the financial arrangements the former NW had made when they purchased the a/c which still have maintenance and spare part addendum's running.

It is admirable that DL does not want to purchase Airbus a/c and want to stick with Boeing, what they should do is what other airlines do, go to Boeing and ask for a deal, rather than lambasting the US Government who is doing what it can to get US products sold. Private companies like DL could care less what the employment situation or trade imbalance is in their home country, quite rightly they are looking for the best deal.

DL is free to run a competition with Airbus and Boeing for its next order, if they squeeze hard enough the discounts may wipe out the imbalance of their lower credit rating.
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 6:41 pm

Look who wrote the article... a defense contractor. What's the largest defense contractor in the states? Boeing.

Things that make you go hmmmm...
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 7:37 pm

Quoting XFSUgimpLB41X (Reply 10):
What's the largest defense contractor in the states? Boeing.
http://washingtontechnology.com/toplists/top-100-lists/2011.aspx
I think it still holds true as of today.
Boeing has been on the lossing end of the military stick for a number of projects, F-22, F-35, can't get additional F-18's or F-15's sold, good thing they are also in the sat business. The P8 program is on schedule and on budget so no rips there, as for the tanker contract, they are probably going to take a bath, so they better get their commercial sale in.
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 9:20 pm

Quoting par13del (Reply 9):

From the link in Reply #6:

"They are also not permitted to draw on similar U.S. support when purchasing Boeing aircraft, be- cause the two countries are subject to what is known as the “home country rule.”"


If Lufthansa can't run to Boeing, I'm pretty sure Delta can't just run to Airbus either.

Quoting par13del (Reply 9):
go to Boeing and ask for a deal, rather than lambasting the US Government who is doing what it can to get US products sold.

It is not Boeing who is handing DL the short-end of the stick. US and European airlines are being wronged by their own governments.

Quoting par13del (Reply 9):
DL is free to run a competition with Airbus and Boeing for its next order, if they squeeze hard enough the discounts may wipe out the imbalance of their lower credit rating.

That's also incorrect:

"Southwest Airlines, which enjoys the best credit rating among all the airlines, can finance its aircraft at an interest rate of 10.5 percent over a period of three years. Emirates, by contrast, pays merely 3.5 percent interest for financing over 12 years through export credit guar- antees, even though the airline does not have an official credit rating."

http://presse.lufthansa.com/fileadmi...ief-October-2010-ExportCredits.pdf





[Edited 2012-04-23 14:24:54]
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 10:08 pm

Nothing but a wag the Dog tactic.....!
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 10:26 pm

Quoting enilria (Reply 5):
What is your defense of JV participation by Delta using planes financed with EXIM loans? The world is so global now for the legacies, there is no moral high ground.

Mayor is a tried and true Deltoid. Deltoids never let hyprocrisy get in the way of what they want. world domination by the widget.
 
catiii
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 11:06 pm

Quoting enilria (Reply 5):
What is your defense of JV participation by
Delta using planes financed with EXIM loans?


Let me preface this by saying that I don't necessarily agree with DL's view here. Having said that, Delta's only JVs, to my knowledge, are with AF/KL. The Large Aircraft Sector Understanding agreement signed between the US and Europe strictly forbade export credit agency (ECA) guarantees being provided in Boeing or Airbus "home markets," therefore the European ECAs cannot guarantee financings for Airbus aircraft sold to U.S. carriers and ExIm cannot guarantee Boeing aircraft sold to Germany, France, the UK, et al. So Delta isn't participating in a JV with ExIm financed aircraft.

My sense is that Boeing orders to Emirates, Air India, Etihad, et al. that are backed by ExIm have nothing to do with those carriers' abilities to secure financing on the street. My sense is that ExIm is used as a carrot by our government to incentivize or reward these countries in a subtle way for actions they may have taken that are in the United States' strategic interests. "Hey Dubai, thanks for letting us use your Emirate as a neutral zone for us to fight a subtle cold war with Iran. Although it isn't in your interests or our interests for us to thank you publicly, here's an ECA backed loan for your Boeing order. Same for you Abu Dhabi, and India, thanks for your help with Pakistan." It's a diplomatic tool. I think that's what Delta and ATA is kind of missing here. Also, if this issuch a big deal, why isn't UA or AA on board with it?

Quoting crj200faguy (Reply 14):
Mayor is a tried and true Deltoid. Deltoids never let hyprocrisy get in the way of what they want. world domination by the widget.

The corollary to that argument is that many folks on this board don't let the facts get in the way of their misstatements and rhetoric...

[Edited 2012-04-23 16:13:45]

[Edited 2012-04-23 16:15:03]
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 11:07 pm

Quoting PPVRA (Reply 12):

If Lufthansa can't run to Boeing, I'm pretty sure Delta can't just run to Airbus either.
Quoting PPVRA (Reply 12):
That's also incorrect:

"Southwest Airlines, which enjoys the best credit rating among all the airlines, can finance its aircraft at an interest rate of 10.5 percent over a period of three years. Emirates, by contrast, pays merely 3.5 percent interest for financing over 12 years through export credit guar- antees, even though the airline does not have an official credit rating."

You are talking about the credit worthiness of the airline, when airlines runs competiton between Airbus and Boeing they are looking for discounts, best prices and deals, as I said, maybe the deal may be good enough to compensate for their inability to get lower interest rates, no right or wrong there. AA got pretty good deals from Airbus and Boeing, heck they ran into Chpt.11 and their deals are still intact, existing creditors should be angry, but that's another topic for another thread.

Quoting PPVRA (Reply 12):
It is not Boeing who is handing DL the short-end of the stick. US and European airlines are being wronged by their own governments.

We all agree that they are barking up the wrong tree, but I cannot agree that the airlines are being wronged by their governments, neither Boeing nor Airbus are complaining about government assistance which got them to where they are, including their current flagship products, so why exactly should airlines outside of the USA and EU not benefit?
If the USA and the EU were so concerned about other countries they would have attempted to include them in their private agreement, assumption being what it is, I would say that they never expected third world or developing countries to be in better financial positions than themselves in such a short period of time. of that their airlines would not be the driving force behind airline purchases so soon.
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Mon Apr 23, 2012 11:47 pm

Quoting enilria (Reply 3):
I'd say that airlines using EXIM financing of Boeing jets aren't hurting Delta all that much. LOL.

Anderson has said it put them in a 4M a year hole on its JFK-BOM flights. He also said it was a main factor of them pulling out. 4M for a single route is pretty big.

Quoting enilria (Reply 3):
so Delta receives the benefit of that financing on its own flights

Only on KL flown JV flights. You'll note that DL is larger than KL across the Atlantic so its hurt the JV as well.
Also how about India?China? South America? Middle east? its not really a Europe thing because they do the same for Airbus. Its got a lot more to do with Asia and the Middle East. (and it doesn't help that a good bit of airlines that get these deals have a endless supply of cash. Again look at AI. They are down right impossible to compete with already and they are getting a 4M advantage from the US government.)
New airliners.net web site sucks.
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 12:01 am

Quoting enilria (Thread starter):
"The aim of Delta’s campaign is to prevent the Export-Import Bank, an independent federal agency, from providing financing for foreign purchases of widebody airliners built by Boeing. Delta management says such planes can be used to compete against U.S. carriers on international routes, and that a government agency should not be helping foreigners to do that."

I'm sorry, but I just lost a tremendous amount of respect for Delta. I mean comon - seriously???

What if Airbus put out an aircraft that would perform 50% better than any other product. Would they still sing the same tune? I think not.

[Edited 2012-04-23 17:03:20]
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catiii
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 12:24 am

Quoting DeltaL1011man (Reply 17):
Anderson has said it put them in a 4M a year hole on its JFK-BOM flights. He also said it was a main factor of them pulling out. 4M for a single route is pretty big.

Delta had filed for an injunction in U.S. District Court for the District of Columbia to stop the Ex-Im guarantees to Air India and the Court held that "any injury to plaintiffs (Delta) that may be caused by the delivery of one or two planes to Air India is, at this stage, wholly speculative." The ruling also said that "if Delta had to cut every nonstop route where it competed with ExIm Bank-backed foreign carriers the lost revenue would represent less than 7% of Delta's business." I think the bigger question here is that, since Delta was competing with Air India on the BOM-JFK segment, how did Delta lose on that route purely on the O/D between BOM and JFK, especially when you consider the power of the JFK hub and the connectivity it provides onward. Delta wasn't selling just BOM-JFK, Delta was selling BOM to any number of destinations via the United States via JFK.

[Edited 2012-04-23 17:25:23]
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 12:30 am

I'm torn on this. On one hand, I do not want to make the playing field unfair. On the other, Ex-Im financing of aircraft (and other goods) has been beneficial to all. Perhaps the answer is to allow Ex-Im financing by the US *and* Europe within the US and Europe. This would allow the *weak* airlines to finance *fast* fleet replacement that would cut oil imports into the two economic blocks. (Ok, not much... but a little.) This would have to be at a set scheme.

For example:
1. Minimum interest rate of X. (say 5%?) Yes, this would be a boost from current rates for some customers.
2. Maximum loan duration of 12 years. (Or 10 or 15... but not infinite).
3. Maximum loan to value of? (I would say 90%.)

Enforce the above provisions on all Ex-IM loans. The idea of killing off Ex-Im financing to Boeing? That would be unlikely.

Quoting PPVRA (Reply 8):
"Emirates, by contrast, pays merely 3.5 percent interest for financing over 12 years through export credit guarantes. . "

No wonder EK rotates their fleet often. They're being paid to rotate the fleet.   Oh wait, that is what these loans are intended for...

On the other hand, these EK-IM loans are part of the deals EK negotiates. It is one of the reasons they are the largest 777 customer and the largest A380 customer. This is the prisoner's dilemma where it might be best if the EU and US stopped the financing; but only if they did it together with a transition.

Quoting PPVRA (Reply 8):
Emirates should have little to no problem in getting very good private sector financing. . . yet they still went with the, yes, sweetheart loans provided by the likes of the Exim bank.

Why would they pay more? Also, in 2009, that was *not* the case for EK. Also, for now, the French banks that often enable aircraft financing are having issues. Without Ex-Im financing to 'smooth the process,' the 777 line would have to be slowed with a sharp reduction in overtime and slowing hiring. Not a wise thing to do in an election year.

This is going to be interesting.

Lightsaber
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tockeyhockey
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 1:45 am

sorry to be so blunt, but delta really is run by a bunch of dicks.
 
deltal1011man
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 2:04 am

Quoting tockeyhockey (Reply 21):

So is every airline in the US and most in Europe too then? Delta is just the spear head, IIRC almost every US airline was backing Delta, and the Euro carriers have also been on record that they want it stopped on that side with Airbus.
*sigh* yes those assholes. Should shoot them for trying to make money and run a business   .

Quoting catiii (Reply 19):

All I'm saying is this what Anderson has said. I personally believe the playing field should be leveled. Let the US carriers use Ex-Im or shut it down. Don't really care which way it works.

Quoting PC12Fan (Reply 18):
What if Airbus put out an aircraft that would perform 50% better than any other product. Would they still sing the same tune? I think not.

You do know Delta has airbus in the fleet and likely got the benefit from the EU?
So in other words, yes, Delta would still be singing the same tune.
New airliners.net web site sucks.
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 2:08 am

Quoting DeltaL1011man (Reply 22):
So is every airline in the US and most in Europe too then? Delta is just the spear head, IIRC almost every US airline was backing Delta, and the Euro carriers have also been on record that they want it stopped on that side with Airbus.
*sigh* yes those assholes. Should shoot them for trying to make money and run a business

yeah, they're trying to maximize their own profits while minimizing the profits of one of their closest partners, boeing. which makes them looks like a colossal collection of dicks, yes.

there is a thing called "the greater good". i know delta has no interest in it, but whatever.

i wonder how profitable DL would be today if they didn't have such a strong partner here in the US building all those fancy aircraft for them to fly around?
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 3:07 am

Quoting tockeyhockey (Reply 23):

Delta is the one losing money right now because of this. Your "greater good" is coming at the expense of Delta. Boeing and the Exim bank are currently (not trying to) hurting Delta's bottom line.

It is not Delta and Lufthansa who are being dicks. Delta is merely asking for a level playing field.

[Edited 2012-04-23 20:07:56]
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
catiii
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 3:41 am

Quoting DeltaL1011man (Reply 22):
All I'm saying is this what Anderson has said.

I understand you're just repeating what he said, but I also recognize that he has an agenda and is trying to make his argument and he certainly needs to cover for getting run out of the market. I find it hard to believe that it is as simple as Air India getting two airplanes backed by ExIm was the cause for driving Delta, with it's network synergies, out of a market that connects one of the most important cities in the United States and a major hub for the airline to one of the fastest growing economies in the world.

Quoting DeltaL1011man (Reply 22):
You do know Delta has airbus in the fleet and likely got the benefit from the EU?

They didn't. They are prevented from doing so by the LASU and the home market rule from using European ECAs, in the same way that German, British, and French carriers are prevented from getting ExIm financing to buy Boeing.

Quoting tockeyhockey (Reply 21):
Delta is just the spear head, IIRC almost every US airline was backing Delta,

Not true. In fact, American and United very publicly did not join the suit, nor joined in whatever Delta is doing in Washington on this. That does seem curious to me, because it would also stand to reason that they are equally hurt by whatever alleged harm ExIm brings to the industry. Obviously A4A represents all the airlines, but Delta is chairing it this cycle and this is all them.

I'd love to be a fly on the wall of some of these meetings at ExIm or at the Capitol and White House and find out what's really going on here. There's gotta be something else to it.
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 4:21 am

Quoting enilria (Reply 5):
What is your defense of JV participation by Delta using planes financed with EXIM loans?

JV or not, they are still individual airlines, free to do what they want. DL has no control over what they do, although they probably don't like the idea. Besides, DL does NOT use those a/c.....they are still flown by the the other carriers.

Quoting PC12Fan (Reply 18):
What if Airbus put out an aircraft that would perform 50% better than any other product. Would they still sing the same tune? I think not.

What does that have to do with it? Just as an FYI, not a single Airbus a/c, now in the fleet, was purchased by DL and I don't think you've seen DL make any orders in the last few years, from Airbus, have you? We're talking about the U.S. EXIM bank, here and the fact is that foreign carriers are getting sweetheart loans from them to finance a/c from Boeing, a U.S. company. This has, apparently, affected DL's bottom line, especially when competing against foreign carriers who have purchased Boeing widebodies with EXIM loans. DL is focusing on Boeing, because we're talking about the U.S. EXIM bank.

Quoting crj200faguy (Reply 14):
Mayor is a tried and true Deltoid.

And damned proud of it, too.

Quoting tockeyhockey (Reply 23):
i wonder how profitable DL would be today if they didn't have such a strong partner here in the US building all those fancy aircraft for them to fly around?

Amazingly enough, DL was a profitable company when they purchased a/c from Convair, Douglas, Boeing and Lockheed. But you wouldn't know that because, for you, airline history didn't exist before you came on board, did it?

Quoting crj200faguy (Reply 14):
Deltoids never let hyprocrisy get in the way of what they want. world domination by the widget.

What is hypocritical about what I said? I simply pointed out that DL is talking about widebodies, because Enilria started talking about RJs and the fact they they were built in Canada and Brazil. All DL wants is a level playing field.....they have no problem with foreign carriers getting these loans, as long as they have the same opportunity to get the same type of loans.
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
gigneil
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 4:27 am

This is the stupidest thing I've ever heard, literally, in my entire life. And I've spent 11 years on A.net now.

Boeing sells more aircraft outside the US than they do here. Without the ExIm bank they will sell zero.

The ExIm bank is what we use to, you know, MAKE TRADE HAPPEN.

Idiots. All of them.

Quoting PPVRA (Reply 24):
It is not Delta and Lufthansa who are being dicks. Delta is merely asking for a level playing field.

BS.

NS
 
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mayor
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 4:35 am

Quoting gigneil (Reply 27):
The ExIm bank is what we use to, you know, MAKE TRADE HAPPEN.

What's wrong with MAKING TRADE HAPPEN on a level playing field?
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
gigneil
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 4:41 am

Frankly, it won't happen. You will destroy Boeing's chances of winning business.

And the conversations about the ExIm bank provides superior financing are based on an allegation that cannot be supported by evidence.

Without the ExIm bank, US manufacturing industry will be at a total loss against the rest of the world. With the economy like this, you want to detract from our number one exporter by a 30% margin continuously for 10 years now.

Brilliant. We should just pull the plug on the economy entirely. Capitalism at its finest.

NS
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 4:47 am

Rant continues:

The point of the Ex Im Bank is TO level the playing field, and 85% of the Ex Im Bank's transactions are to create opportunity for small business.

Lets take Boeing out of it - Boeing is directly subsidized by the US government in MANY ways. Let's take our small energy businesses in Pittsburg or Greensburg, Kansas. Those guys deal with transactions that no bank would normally accept the risk on. The Ex Im Bank's evaluations almost guarantee their repayment.

Further, the Ex Im Bank is off budget - and has been for years. Its fully funded by fees from existing and new loans.

NS
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 4:51 am

Quoting PPVRA (Reply 24):
Delta is the one losing money right now because of this.

Final rant:

PROVE IT.

You can't. Nobody can. Not even Delta.

NS
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 12:11 pm

Hang on...... this finance allows airlines to have aircraft built by Boeing in the good old USA and utilise Boeing's supply chain, without this would we see massive aircraft orders by airlines worldwide???

Would these orders go elsewhere?

If it keeps people MAKING things rather than providing a service, isn't that a good thing????

Any old country can buy a few planes and run an airline, it takes a sophisticated economy - with a skilled workfoce to actually produce the aeroplanes in the first place and keep people working through the part supply chain
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 1:44 pm

So what would be DL complaint if the government of India had said they did not want DL on the BOM route, they "preferred" another US carrier? Nations sign joint agreements to allow carriers to service routes, it is up to each nation to select their own carriers, but the other side can "advise" what it likes and does not like.

A number of developing nations signed such agreements even though they did not have national carrier's, if they do create one and start competition with DL resulting in lower loads and profits, are they going to complain about the nations getting their own carriers?

I bring this up because if nations are denied access to EX-Bank financing, they will just obtain financing elsewhere, like getting trade incentives from the US Government which the accepting nation somehow finds a way to divert / convert into low interest loans to their local carrier to purchase a/c, at least by allowing them access to EX-Bank the world can see the terms and conditions of the loan, if it is with the local government, good luck trying to find the terms.
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 2:03 pm

Quoting PPVRA (Reply 12):
Emirates, by contrast, pays merely 3.5 percent interest for financing over 12 years through export credit guar- antees, even though the airline does not have an official credit rating."

I think part of that is also that Emirates survival is essentially supported by the full faith and credit of the country of U.A.E., while Delta filed for Ch11 a few years ago and thus has a deserved junk credit rating. If they wanted better credit they should have avoided Ch11. As a consumer filing for bankruptcy damages my future credit, why shouldn't that be the case for an airline?

Let me pose this question. Suppose an airline in the USA raises cash through the issuance of unsecured debt and uses the money to buy an airplane for $100 million. They file for Ch11 (a practice that does not exist in most other countries) and only end up paying 20 cents on the dollar to unsecured creditors. That means this theoretical airline only paid $20 million for their jet and the other airlines paid $100 million because the USA has a bankruptcy policy that is out of step with the rest of the world. How should this inequality be also equalized?
Quoting crj200faguy (Reply 14):
Quoting enilria (Reply 5):
What is your defense of JV participation by Delta using planes financed with EXIM loans? The world is so global now for the legacies, there is no moral high ground.

Mayor is a tried and true Deltoid. Deltoids never let hyprocrisy get in the way of what they want. world domination by the widget.
Quoting tockeyhockey (Reply 21):
sorry to be so blunt, but delta really is run by a bunch of dicks.

I think Delta is doing what is in the best interest of Delta. I don't agree with their strategy, though. They run the risk of getting negative publicity from it.

Quoting catiii (Reply 15):
So Delta isn't participating in a JV with ExIm financed aircraft.

I posted a link above to KLM aircraft financed with EXIM financing (post 3). It is a pet peeve of mine when people post opinions as fact without even reading already posted and attributed facts.

Quoting DeltaL1011man (Reply 17):
Quoting enilria (Reply 3):
so Delta receives the benefit of that financing on its own flights

Only on KL flown JV flights. You'll note that DL is larger than KL across the Atlantic so its hurt the JV as well.

DL will seek a JV with KE who is a heavy user of EXIM as well. The bottom line is that DL receives benefit from EXIM. That doesn't mean they can't complain about it too, it just weakens their position since their core argument is that it only benefits others.

Quoting gigneil (Reply 31):
Quoting PPVRA (Reply 24):
Delta is the one losing money right now because of this.

Final rant:

PROVE IT.
Quoting PPVRA (Reply 24):
Delta is the one losing money right now because of this.

They made a 1 billion profit last year.  
Quoting mayor (Reply 26):
JV or not, they are still individual airlines, free to do what they want. DL has no control over what they do, although they probably don't like the idea. Besides, DL does NOT use those a/c.....they are still flown by the the other carriers.

The other airlines in the JV are not free to do what they want with JV routes. Essentially, DL has 50% "ownership" of the JV. Delta controls the routes to a great extent as well. KL cannot simply add ATL-AMS 3x daily in the JV without DL approval. So, they are not free at all.
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 2:32 pm

Quoting gigneil (Reply 27):
Boeing sells more aircraft outside the US than they do here. Without the ExIm bank they will sell zero.

The ExIm bank is what we use to, you know, MAKE TRADE HAPPEN.

Agreed. But DL is rightfully frustrated that they do not have access to similar financing. What is the solution? I have my proposal in reply 20.

Ex-Im must be continued or all the Asia regional aircraft would be Chinese made. I'm sure they wouldn't be skimpy on Ex-Im financing...

Lightsaber
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 3:32 pm

Quoting catiii (Reply 25):
Not true. In fact, American and United very publicly did not join the suit, nor joined in whatever Delta is doing in Washington on this. That does seem curious to me, because it would also stand to reason that they are equally hurt by whatever alleged harm ExIm brings to the industry. Obviously A4A represents all the airlines, but Delta is chairing it this cycle and this is all them.

Just because they decided not to join DL on this unlikely to succeed lawsuit does not mean they do not fully support Delta's efforts.

Quoting gigneil (Reply 27):
Boeing sells more aircraft outside the US than they do here. Without the ExIm bank they will sell zero.

This is so obviously wrongheaded it's beyond ridiculous. Boeing sells plenty of aircraft to Air France, and Air France does not qualify to for credit from Exim Bank.

Quoting gigneil (Reply 27):
The ExIm bank is what we use to, you know, MAKE TRADE HAPPEN.

Nope, as shown in the AF example.


Quoting gigneil (Reply 31):
Final rant:

PROVE IT.

You can't. Nobody can. Not even Delta.

The Lufthansa article I posted, which you probably didn't read, shows very clearly that this policy is putting US and EU airlines at a competitive disadvantage to the likes of Emirates. If the 3.5% rate talked about in the article is correct, it is a proven fact already.

[Edited 2012-04-24 08:49:23]
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
PPVRA
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 3:39 pm

Quoting enilria (Reply 34):
I think part of that is also that Emirates survival is essentially supported by the full faith and credit of the country of U.A.E., while Delta filed for Ch11 a few years ago and thus has a deserved junk credit rating. If they wanted better credit they should have avoided Ch11. As a consumer filing for bankruptcy damages my future credit, why shouldn't that be the case for an airline?

The Lufthansa press release compares Emirates to Southwest Airlines, the airline with the highest credit rating in the world . So it really has nothing to do with Delta in this aspect. Though I give you that the UAE's backing is going to have an effect on EK's credit rating, this also shows that EK does not need credit guarantees from the US or Europe.

Quoting enilria (Reply 34):
Let me pose this question. Suppose an airline in the USA raises cash through the issuance of unsecured debt and uses the money to buy an airplane for $100 million. They file for Ch11 (a practice that does not exist in most other countries) and only end up paying 20 cents on the dollar to unsecured creditors. That means this theoretical airline only paid $20 million for their jet and the other airlines paid $100 million because the USA has a bankruptcy policy that is out of step with the rest of the world. How should this inequality be also equalized?

Under Chapter 11, companies can renegotiate contracts, they won't be keeping a jetliner for 20% of the price.

edit: I'll also give you that CH11 brings other questions, but any country can pass these laws just like Brazil quickly did when Varig was going under, and I'd add that some of the problems Ch11 brings actually hurt US airlines. But, this is for a another thread. . .

[Edited 2012-04-24 08:51:02]
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
Mir
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 3:49 pm

Quoting PPVRA (Reply 24):
Delta is the one losing money right now because of this. Your "greater good" is coming at the expense of Delta. Boeing and the Exim bank are currently (not trying to) hurting Delta's bottom line.

Perhaps, but the question is whether the benefits to the various US manufacturers involved in producing Boeing aircraft are worth more overall to the economy. Since the US manufacturing sector is currently struggling and Delta currently isn't, I'd have to say that they are.

-Mir
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 3:51 pm

Quoting enilria (Reply 34):
The other airlines in the JV are not free to do what they want with JV routes. Essentially, DL has 50% "ownership" of the JV. Delta controls the routes to a great extent as well. KL cannot simply add ATL-AMS 3x daily in the JV without DL approval. So, they are not free at all.

It's not just DL in the mix in the JV.......you also have AF & AZ, if I'm not mistaken. Not sure of the mechanics of the JV, but I would imagine that what one airline does, has to get the approval of the others, when it pertains to the JV. Otherwise, the other airlines are STILL free to do what they wish.

Quoting enilria (Reply 34):
DL will seek a JV with KE who is a heavy user of EXIM as well. The bottom line is that DL receives benefit from EXIM. That doesn't mean they can't complain about it too, it just weakens their position since their core argument is that it only benefits others.

Very indirectly. How many a/c has KE bought from Boeing that do not operate on routes in a JV? The same question applies to KLM...........
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 3:54 pm

Quoting Mir (Reply 38):
Perhaps, but the question is whether the benefits to the various US manufacturers involved in producing Boeing aircraft are worth more overall to the economy. Since the US manufacturing sector is currently struggling and Delta currently isn't, I'd have to say that they are.

The most important argument against this is that you are sacrificing your justice system for economic gain.

Less importantly, Boeing is about to start popping out nearly 50 737s per month. They are not struggling. On the there hand, airlines are most certainly still struggling, even if some of them have been able to turn out profits lately.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
Mir
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 4:04 pm

Quoting PPVRA (Reply 40):
The most important argument against this is that you are sacrificing your justice system for economic gain.

That is true of a non-laissez-faire capitalist economy.

Quoting PPVRA (Reply 40):
Less importantly, Boeing is about to start popping out nearly 50 737s per month. They are not struggling.

In which case the program can be reviewed and altered. But it's worth remembering that many of Boeing's orders come from EXIM assistance or financing, and taking that away might result in there not being 50 737s every month (maybe 40).

Quoting PPVRA (Reply 40):
On the there hand, airlines are most certainly still struggling, even if some of them have been able to turn out profits lately.

If you're turning out a profit, I'd be hard-pressed to say you're struggling in the current economic state of the airline industry.

-Mir
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strfyr51
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 4:14 pm

the EX-IM Bank finances at rates no American Carriier can get from a Bank themselves, Delta argues that if they CAN get their OWN financing then they SHOULD get it and the EX-IM bank be the LAST resort. All we're doing is finincing competitors where the usa is at the disadvantage. OR open the EX-IM bank rates to American Delta and UAL and all the other Airlines in the USA. Especially as it's financed by US TAXPAYERS Isn't THAT fair? Leasing Companies like IFLC and others? ?Straight commercial and NOT get EX-IM bank financing at ALL!
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 4:53 pm

Quoting PPVRA (Reply 37):
Though I give you that the UAE's backing is going to have an effect on EK's credit rating, this also shows that EK does not need credit guarantees from the US or Europe.

Is this about EK or EXIM? Government owned airlines have been around since the industry began. Is Delta proposing that also be outlawed because it is unfair? Go for it, but that's dead on arrival. If the bottom line issue is whether other airlines can get better rates on airplanes because of govt assistance or ownership, the answer is...of course they can.

BTW, Air France/KLM is 19% owned by the government of France and as a JV partner gets the credit benefits by being tied to the French gov't. What a tangled web we weave...
http://en.wikipedia.org/wiki/Air_France-KLM

Quoting PPVRA (Reply 37):
Quoting enilria (Reply 34):
Let me pose this question. Suppose an airline in the USA raises cash through the issuance of unsecured debt and uses the money to buy an airplane for $100 million. They file for Ch11 (a practice that does not exist in most other countries) and only end up paying 20 cents on the dollar to unsecured creditors. That means this theoretical airline only paid $20 million for their jet and the other airlines paid $100 million because the USA has a bankruptcy policy that is out of step with the rest of the world. How should this inequality be also equalized?

Under Chapter 11, companies can renegotiate contracts, they won't be keeping a jetliner for 20% of the price.

Absolutely they can. Either you didn't read what I wrote or you don't understand Ch11 law. Delta/NW did the exact thing I described. Unsecured creditors cannot repo company assets in Ch11. They simply get paid the residual after secured claims are paid.

Quoting mayor (Reply 39):
Quoting enilria (Reply 34):
The other airlines in the JV are not free to do what they want with JV routes. Essentially, DL has 50% "ownership" of the JV. Delta controls the routes to a great extent as well. KL cannot simply add ATL-AMS 3x daily in the JV without DL approval. So, they are not free at all.

It's not just DL in the mix in the JV.......you also have AF & AZ, if I'm not mistaken. Not sure of the mechanics of the JV, but I would imagine that what one airline does, has to get the approval of the others, when it pertains to the JV. Otherwise, the other airlines are STILL free to do what they wish.

What you just described is the opposite of freedom. They all have to agree. Confused...

Quoting mayor (Reply 39):
Very indirectly. How many a/c has KE bought from Boeing that do not operate on routes in a JV? The same question applies to KLM...........

Only a portion of the KE fleet was bought with EXIM. A link is above in post 3. Is that a good thing or a bad thing? You could argue either side. The smaller the % the less the impact on their costs. LOL. The greater the % the more DL benefits.
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 5:21 pm

Quoting enilria (Reply 43):

What you just described is the opposite of freedom. They all have to agree. Confused...

What I'm saying is that if it pertains to the JV, all the members of the JV have to agree (I would assume). If it doesn't pertain to the JV, then they can do what they want (within the parameters of the Skyteam rules). They are still, ALL, independent airlines and can make a/c purchases, etc. on their own. None of that is controlled by the other members, whether JV or Skyteam.
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 5:32 pm

Quoting enilria (Reply 43):
Is this about EK or EXIM?

EXIM.

Quoting enilria (Reply 43):
Government owned airlines have been around since the industry began. Is Delta proposing that also be outlawed because it is unfair? Go for it, but that's dead on arrival.

There is a difference when somebody else's government is running an airline and when your own government is supporting your competition. Even though DL, LH, AZ, et al would have every right to complain if the UAE guaranteed Emirate's debt, it's worse and frankly insulting if your own government does it at your expense.

Quoting enilria (Reply 43):
Absolutely they can. Either you didn't read what I wrote or you don't understand Ch11 law. Delta/NW did the exact thing I described. Unsecured creditors cannot repo company assets in Ch11. They simply get paid the residual after secured claims are paid.

They absolutely cannot "steal" an aircraft from whoever is financing it. If that was the case, US airlines would have to pay cash for their aircraft and they would be at a massive disadvantage.

Ch11 is temporary.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
strfyr51
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 6:06 pm

OR?!? The EX-IM bank shoulf finance Airplanes for the USA airlines at the SAME RATE!!
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 7:46 pm

Quoting PPVRA (Reply 36):
Boeing sells plenty of aircraft to Air France, and Air France does not qualify to for credit from Exim Bank.

Boeing sells less a/c to AF than they do to airlines in the USA, so I'm not sure I see the correlation. The bulk of Boeing sales are not in the USA or EU.

Quoting strfyr51 (Reply 42):
Delta argues that if they CAN get their OWN financing then they SHOULD get it and the EX-IM bank be the LAST resort

Well, some have said the same about RLI, however, the general a.net consensus is that if one has access to lower cost of capital financing they would be foolish not to use it.

Quoting strfyr51 (Reply 42):
OR open the EX-IM bank rates to American Delta and UAL and all the other Airlines in the USA

So as mentioned, carriers like DL and UA who have eliminated a number of creditors in Chpt.11 proceedings will be on the same page as WN who has never done Chpt.11, and this is fair? Say it aint so.
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Tue Apr 24, 2012 7:50 pm

Quoting par13del (Reply 47):
Boeing sells less a/c to AF than they do to airlines in the USA, so I'm not sure I see the correlation. The bulk of Boeing sales are not in the USA or EU.

The claim was that there would be "zero" exports if EXIM was not available. It was an obviously false claim.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
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RE: DL Vs. Boeing: DL Wants Loans Ended For Foreigners

Wed Apr 25, 2012 1:28 am

Quoting PPVRA (Reply 36):
Just because they decided not to join DL on this unlikely to succeed lawsuit does not mean they do not fully support Delta's efforts.

And yet they have been very clear in alerting policy makers that they have no part in this, no dog in this fight, and this is Delta going alone.

Quoting strfyr51 (Reply 42):
OR open the EX-IM bank rates to American Delta and UAL and all the other Airlines in the USA. Especially as it's financed by US TAXPAYERS Isn't THAT fair?

Not exactly true. When the Ex-Im Bank was initially established in 1934 it was capitalized by an appropriation of $1 billion from the U.S. Treasury. Beginning in 2008, the Ex-Im Bank became completely self-sustaining through fees it charges in exchange for being the guarantor . In order to provide Congressional oversight, the President requests approval by the Congress for the level of expenses that the Ex-Im Bank would cover on its own, but the taxpayer puts no money into it.

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