Boeing Finds An Ex-Im Alternative

By Doug Cameron Features Dow Jones Newswires

Boeing Co. has sealed a deal for Italy's export credit agency to provide an initial $1.25 billion a year in guarantees for jetliner sales, partly to fill the void left by the U.S. Export-Import Bank.

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Airlines use guarantees from export credit agencies to secure cheaper commercial funding, but the U.S. Ex-Im has been closed to deals valued at more than $10 million since July 2015 as some lawmakers blocked the appointment of a new board.

During the height of the financial crisis, export-credit agencies supported as much as 30% of commercial aircraft deliveries. The total has fallen to less than 5% as Ex-Im remained on the sidelines and agencies in the U.K., Germany and France that back Airbus SE deals also halted new business because of a probe into alleged corruption.

While President Donald Trump has in recent weeks reversed his prior opposition to the Ex-Im, sales supported by overseas agencies would provide additional options for Boeing customers that find it tough to secure commercial finance.

The new pact with Italy's Sace SpA is the first between Boeing and an overseas export credit agency and provides a template for the company to secure similar deals with other countries that supply large parts of its jetliners, said Jon Byron, an aviation financier at Apple Bank.

Sace's involvement reflects the role of Italian companies such as Leonardo SpA in providing parts for Boeing jets, which Sace said supported 12,000 jobs in the country. It sealed its first deal this month with guarantees for three 737-800 planes acquired by Turkey-based SunExpress. Boeing's best-selling jet has a list price of $98 million, though airlines typically secure large discounts.

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U.K. Export Finance, Britain's state-owned export agency that has long backed sales of Boeing jets powered by Rolls-Royce Holdings PLC engines, is expanding its offerings. Other countries with large Boeing suppliers -- such as Japan and South Korea -- are expected to follow the path taken by Italy, said bankers.

Boeing declined to comment on any pending agreements with other agencies but said the Sace deal provided an alternative for some customers, even as the company continues to push for Ex-Im to be reopened for large deals.

Airlines have traditionally been by far the largest user of Ex-Im guarantees and Boeing has led the lobbying battle to keep the bank open, claiming it is at a competitive disadvantage to Airbus without access to comparable U.S. financing.

The aerospace giant has resorted to renting some jets to customers unable to secure commercial funding.

Aerospace accounted for almost half of Ex-Im's business in fiscal 2015 and had been moving beyond commercial jetliners to back sales of satellites, rocket launches, business jets and helicopters, as well as aircraft repairs and other aviation services.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

May 31, 2017 13:15 ET (17:15 GMT)