The Air Transport Association of America has filed suit against the US Export-Import bank in an attempt to block $3.4 billion in loan guarantees linked to Air India's purchase of 30 Boeing aircraft, including 27 Boeing 787s.
"It fails to meet statutory requirements, including consideration of the impact on the US airline industry and US airline jobs," says ATA of the guarantees.
The advocacy group says $1.3 billion in loan guarantees were recently approved for Air India and the Ex-Im bank is now considering guarantees on an additional $2.1 billion in financing for the batch of aircraft - three Boeing 777s and 27 Boeing 787s - to be delivered over the next four years.
In the suit, ATA asks the court "to find the Air India loan-guarantee commitments unlawful, to prevent the loan guarantees from being issued, and to order injunctive relief requiring the Ex-Im Bank to comply with its statutory obligations".
ATA says US loan guarantees enable foreign carriers to obtain financing for aircraft at "considerably lower rates", in some cases up to 50% lower, than the rates that US carriers must pay on the commercial market.
"Having received more than $52 billion in US taxpayer-funded loan guarantees over the last 10 years, foreign carriers have added capacity and gained market share," says ATA. "Lower financing costs have allowed foreign airlines to add 12% more capacity on US-international routes than they would have without Ex-Im Bank guarantees. That overcapacity already has crowded out US airlines and forced some carriers to cut routes."
ATA estimates that the Ex-Im Bank guarantees to foreign carriers have caused US airlines to cut between 4,100 and 7,500 jobs, costing employees $372 million to $684 million in lost income.
"While we support the goal of expanding US exports, it cannot come at the expense of US companies and US jobs," says ATA chief executive and president Nicholas Calio. "We repeatedly have sought additional information about the timing and details of the Air India delivery but the Ex-Im Bank has refused to provide it. ATA has no choice but to seek judicial intervention in order to prevent our members from suffering irreparable injury."
Source: Air Transport Intelligence news
