September 30, 2015 / 6:09 PM / 2 years ago

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

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

WASHINGTON (Reuters) - South African airline Comair Ltd COMJ.J has told Boeing Co (BA.N) 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).

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.

Boeing said the total Comair order was worth more than $1.1 billion.

“Comair needs to take an urgent decision on whether to proceed with this order, before the pre-delivery payments commence next year,” Comair Chief Executive Erik Venter said in a letter sent on Monday to Boeing Chief Executive Dennis Muilenburg and Ray Conner, who runs Boeing’s commercial airplane division.

“Comair will need to begin negotiations with Airbus and with the European (export credit agency) for financial support,” it said.

Reporting by Andrea Shalal; Editing by David Gregorio and Christian Plumb

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