Bank’s Financing Packages to Foreign Airlines Stifles U.S. Airlines Ability to Compete
WASHINGTON— Yesterday, the Air Line Pilots Association, Int’l (ALPA) filed a lawsuit in federal court against the U.S. Export-Import Bank for approving loan guarantees to several foreign airlines while disregarding the adverse economic impact the financing has on U.S. airlines and their employees, which it is legally required to do. ALPA was joined by Delta Air Lines and Hawaiian Airlines as plaintiffs in the suit.
The lawsuit challenges the Ex-Im Bank’s approval of loan guarantees to Etihad Airways, Korean Air Lines, LATAM Airlines Group, and Lot Polish to purchase widebody aircraft that would allow them to increase their fleets and gain access to key international routes. The guarantees would put U.S. airlines at a competitive disadvantage, possibly forcing them to cut market share, reduce flights, and trim American jobs.
“A law was passed last year that requires the Ex-Im Bank to perform an economic analysis to assess the effect of bank financing decisions on U.S. airlines and its workers,” said ALPA president Captain Lee Moak. “In this suit, we are challenging their failure to perform that analysis. Financing these airlines with U.S. taxpayer dollars at rates substantially less than what U.S. airlines have to pay in the open market is a direct assault on the U.S. airline industry. ALPA will continue to urge the reform of the Ex-Im Bank’s practices to ensure it adheres to U.S. laws and benefits our airline industry.”
In FY2012, the bank allocated approximately 46% of its total financial commitments for air transportation loans and loan guarantees, which was more than the three next-largest industrial sectors combined. Since 2005, the bank has provided foreign airlines with the following financing:
- $34.5 billion from 2005 to 2010
- $11.4 billion in 2011
- $11.6 billion in 2012
This is the third lawsuit ALPA and other plaintiffs have filed against the Ex-Im Bank. In February, ALPA filed a suit together with Delta and Hawaiian challenging the bank’s new guidelines and procedures for assessing the economic effects of its financing practices on U.S. airlines and their employees. In November 2011, ALPA and Airlines for America (A4A) sued the bank to block it from guaranteeing billions of dollars of financing for Air India to purchase a large number of aircraft. Both suits are ongoing.