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U.S. EXIM Paralysis Puts Sale at Risk says Boeing CEO


04/08/2016


U.S. EXIM Paralysis Puts Sale at Risk says Boeing CEO
Flagging an issue that also affects General Electric and other U.S. companies that depend on the agency's export financing, Boeing chief executive said that a delay in appointing U.S. Export-Import Bank board members threatens to cost Boeing Co sales.
 
Boeing Chief Executive Dennis Muilenburg said at EXIM's annual conference in Washington that only two of five seats on the agency's board are filled which is not enough to approve deals over $10 million and as a consequence Boeing is on the verge of losing orders.
 
EXIM Chairman Fred Hochberg said that financing of billions of dollars in sales of U.S. aircraft, rail, power and communications equipment around the world would be allowed by the appointment of a third board member.
 
"We've got about $10 billion (worth of loans and guarantees) in our pipeline right now. If exports slow in the areas that require our financing, it will also hit the supply chain" of 14,000 U.S. companies that supply Boeing, and jobs, that are being held up because of the short-handed board,” Hochberg said in an interview.
 
The sales for Boeing, GE, Caterpillar Inc and other companies have effectively been blocked due to halting of confirmation of a third member by Senate Banking Committee Chairman Richard Shelby's moratorium on some of the 16 Obama administration financial nominees who have been awaiting panel confirmation.
 
Concerns that a lack of EXIM financing could prevent it from buying more Boeing planes have been expressed by Ethiopian Airlines, Muilenburg said.
 
Carriers with higher credit risk or loans of 10 years or more to smaller carriers have not been approved by banks without a government guarantee. Concerns have been voiced by experts that resources from product development would be drained if Boeing self-financed such deals.
 
Due to the gap in EXIM funds, Boeing already has had to provide or arrange bridge financing for several airlines, say industry sources.
 
After EXIM's charter lapsed on June 30 last year, two signed or potential satellite deals were lost by Boeing, the company said. The charter was renewed later in the year.
 
With the intention of availing foreign export credit advantages General Electric decided to move some production overseas.
 
This year export credit has become more important as an industry-wide boom in orders fades resulting in a slowdown of global jetliner sales.
 
In 2017, the production of its 777 jetliner has been planned ot be slowed down by Boeing. In the first quarter, the company managed to deliver 176 airliners, Boeing said on Thursday. Even as many deliveries are made later in the year, that pace as evident in the first quarter is below Boeing's target of 740 to 745 deliveries for the year.
 
The Trans-Pacific Partnership trade deal that has been an issue in the U.S. presidential campaigns was also supported by Muilenburg.
 
The pact would not put U.S. workers at a disadvantage, he said. A "dependable, robust" U.S. defense budget was needed by the defense industry so it could invest, he added.

(Source:www.reuters.com)