Airbus, Boeing Hopeful on Return of State-Backed Plane Financing

FeaturesDow Jones Newswires

Robert Wall

DUBLIN--Boeing Co. (BA) and Airbus SE (AIR.FR) officials on Monday signaled optimism that problems denting their access to government-backed plane financing are nearing resolution.

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The U.S. Export-Import Bank, or ExIm, which typically backs Boeing plane exports is affected by the U.S. government's partial shutdown absent a budget agreement. Even before the government shutdown of all-but essential staff, ExIm had been restricted to providing support to deals valued below $10 million because its board lacked sufficient members to approve larger transactions.

The shutdown will likely temporarily slow the U.S. Senate's ability to address other issues that have limited ExIm's support of aircraft transactions, said Boeing Capital Corp. Vice President for Regulatory Policy Daniel Da Silva. Still, he said that once Congress resolves the budget issues, it can turn to approving ExIm board members that are awaiting confirmation. Once those are in place, the institution would be able to back larger deals again.

Airbus also has been struggling to get backing from its governments for export deals. France, Germany and the U.K. in 2016 suspended financial backing for the plane maker's exports amid concern that Airbus had failed to fully disclose the use of middlemen in certain transactions. The British Serious Fraud Office also is investigating the issue.

Christin Lodberg, Airbus vice president for customer finance, said "we will see the comeback fairly soon" of export credit agency support. The scale, though, will likely be lower than in the past, and the process for each application is expected to be more cumbersome, she said at the Airline Economics Growth Frontiers conference.

Thomas Kolberg, head of aircraft at the German export credit agency Euler Hermes said at the event that the European financial institutions were still establishing a process to assure themselves of Airbus's compliance rules. "We are working quite hard with Airbus to come to a solution," he said, adding that talks were progressing.

Britain could be back in the business of backing Airbus deals this year, said Pat Cauthery, head of aerospace at the U.K. Export Finance agency.

Boeing and Airbus last year both delivered a record number of planes. Though commercial financing for the planes was ample, both Airbus and Boeing are eager to regain access to government-backed credit as an insurance. Some financially weaker airlines need to tap the government-backed financing or the plane makers themselves.

Mr. Da Silva said the export credit also could be needed if the market suffers a downturn. While export credit has fallen to less than 10% of deliveries in recent years, during the last financial crisis it spiked to as much as 30%, he said.

Airbus financed a handful of deals last year that lacked access to commercial money, Ms. Lodberg said.

Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

January 22, 2018 08:02 ET (13:02 GMT)