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Abu Dhabi, UAETuesday 16 October 2018

Boeing says Exim Bank vital for the US amid competition from China

Export credit agency "very important" for US planemaker's long-term competitiveness, Boeing Capital chief says

The agency is “very important” in allowing Boeing to compete with its rivals “on a level playing field” and the company will continue to push for Exim’s restoration, Tim Myers, president of Boeing Capital. Reuters
The agency is “very important” in allowing Boeing to compete with its rivals “on a level playing field” and the company will continue to push for Exim’s restoration, Tim Myers, president of Boeing Capital. Reuters

Planemaker Boeing said the US Export-Import Bank (Exim), the country's export credit agency, to its full lending powers is vital to the country's economy and the company's ability to compete with global rivals.

The agency is “very important” in allowing Boeing to compete with its rivals “on a level playing field” and the company will continue to push for Exim’s restoration, Tim Myers, president of Boeing Capital, told reporters in Dubai on Wednesday.

"It's important for the US, for US workers, it's important for us in long-term competitiveness," Mr Myers said. "If you look at China, who’s also starting to develop aircraft, they have three export credit agencies in China alone."

The US is locked in an escalating trade war with economic rival China in a tit-for-tat round of tariffs. The long-hobbled US export credit agency, which facilitates export deals between American manufacturers and overseas buyers, has been in limbo for three years due to congressional inaction. Restoring the bank's lending abilities to its full extent would be a major win for US giants such as Boeing and General Electric who have international customers that use the bank's government-backed loans to buy their products.

Export credit financing, a key instrument for global airlines to fund jet deliveries, was used by Middle East carriers to diversify their sources of aircraft financing.

Bank debt, cash and sale-and-leaseback remain the more popular financing instruments for regional airlines and there is a growing opportunity for Sharia-compliant lenders to expand in the market for financing aircraft deliveries, Mr Myers said.

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The US Senate is expected to confirm at least three board members of the bank, which would allow Exim to resume approving loans and guarantees over $10 billion.

"We’re very hopeful that the senate will send nominees to the floor for vote very soon and get it back up," Mr Myers.

The agency has been effectively dormant since 2015 as it lacks a board quorum needed to approve transactions over $10bn.

In 2018, export credit is expected to remain a "marginal" share of aircraft financing but export credit agency volumes will increase to stable levels from historical lows this year, Boeing said.