U.S. export bank's loss jeopardizes Boeing orders, airline says

Wed Sep 30, 2015 3:06pm EDT
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By Andrea Shalal

WASHINGTON (Reuters) - South African airline Comair Ltd (COMJ.J: Quote) has told Boeing Co (BA.N: Quote) that the loss of U.S. Export-Import Bank financing could jeopardize a $1.1 billion order it had placed for Boeing jetliners, leading the carrier to turn to Europe's Airbus (AIR.PA: Quote).

Comair made the warning in a letter disclosed on Wednesday by Boeing, which has already lost two satellite deals due to the June shutdown of the U.S. trade bank. The planemaker and other top U.S. manufacturers are fighting to get the bank reauthorized.

In the letter, Comair said that unless the bank resumed lending, it would have to launch a new tender for aircraft finance, which could drive up the cost, and would undermine the "long-term viability of acquiring Boeing aircraft."

Boeing and other supporters of the bank are heaping pressure on House Speaker John Boehner to allow a vote on the future of the bank before he leaves Congress at the end of October, worried that his likely successor, House Majority Leader Kevin McCarthy, would oppose its reauthorization.

Conservative Republicans who oppose the bank say it exemplifies "corporate welfare."

Industry executives insist they have the needed votes in the House and Senate to revive the bank, but it remains unclear if Boehner will facilitate a vote before he leaves.

Comair, which has three deliveries of 737-800 airplanes scheduled between October and November 2016, said lack of export financing could force the airline to borrow money in a foreign currency, exposing it to "too great an exchange rate risk."

The airline said it was also reconsidering orders of eight Boeing 737 MAX 8 aircraft that are scheduled for delivery from 2019 to 2021.   Continued...

Boeing 737 fuselages are delivered by BNSF train to a Boeing manufacturing site in Renton, Washington February 27, 2014. REUTERS/Jason Redmond