By David Fickling, Bloomberg News
CHICAGO (Oct. 10, 2014) — Boeing Co. said closing the U.S. government's Export-Import Bank is “outside the realm of realistic” and the aircraft maker isn't making contingency plans for that risk.
“How would you plan for an Armageddon?” Kostya Zolotusky, managing director for capital markets and leasing at the Chicago-based company, said in Sydney Oct. 7. “We're not planning for an Armageddon. You can't plan for an Armageddon.”
The Export-Import Bank is a little-known federal agency that finances many companies' high-ticket sales to foreign buyers. Its loans and guarantees supported $8.3 billion of Boeing's aircraft sales last year; it must be reauthorized by the U.S. government in June, after midterm elections in November where Republicans may win control of both houses of Congress.
Jeb Hensarling, who oversees the Ex-Im Bank as Republican Chairman of the House Financial Services Committee, said in June that “we cannot reauthorize the status quo” as the bank may be “guilty of corruption,” cronyism, and sending taxpayer money to foreign interests.
Abolishing the 80-year-old lender, which helped fund the Pan-American Highway and European reconstruction under the Marshall Plan, is a litmus test for small-government conservatives affiliated with the Tea Party movement, including Mr. Hensarling. They argue that its role could be filled by private lenders instead.
Last June Boeing, along with Illinois-based Caterpillar Inc., began scrambling to block a move by conservative Republicans in Washington, D.C., to kill the U.S. Export-Import Bank.
About 65 percent of the bank's long-term loan guarantees last year supported the purchase of Boeing aircraft, according to the Congressional Research Service. Such guarantees have included $1.1 billion to support the sale of 27 737-900ERs for a unit of Indonesia's PT Lion Mentari Airlines in March 2013 and a $3.4 billion guarantee for Air India that's been challenged in court by Delta Air Lines Inc. (DAL)
The strength of funding from aircraft-backed loans, commercial banks trying to diversify away from home loans, and leasing companies and airlines taking advantage of lower interest rates, would help ride out any disruption, Mr. Zolotusky said.
“The commercial markets are as healthy as they can be and we don't plan contingencies that are macro-market disruptive,” he said. “When you look at the debate, the passions exaggerate the reasonableness and the pragmatism that people will arrive at eventually.”