ExIm Bank still at risk despite Boeing effort with Trump

US Sen. Richard Shelby of Alabama.

Feb. 20, 2017, © Leeham Co.: Boeing may have won over President Trump about the virtues of ExIm Bank (it’s not entirely clear), but he’s the wrong target.

It’s US Sen. Richard Shelby (R-AL) who’s been holding up appointments to the ExIm Board of Directors, blocking a quorum needed to approve aircraft financing guarantees on anything more than $10m.

Shifting support

Shelby was the chairman of a key US Senate committee which had direct authority over ExIm Bank appointments. Shelby blocked appointments under President Obama, claiming ExIm is an agency of corporate welfare, of which Boeing was the principal beneficiary.

However, Shelby was once a supporter of ExIm. After Obama was elected, the rise of the so-called Tea Party (largely to oppose all things Obama) targeted ExIm as a wasteful government agency. (Never mind that ExIm returned a surplus to the Treasury since its Depression-era inception though its fees.)

More to the point: Boeing rival Airbus selected Mobile (AL) for a new assembly site, first for the planned US Air Force tanker, the KC-330 based on the Airbus A330-200. The contract award was vitiated after it was determined the USAF treated Boeing unfairly.

Boeing won the re-bid. Airbus then chose Mobile as its US assembly site for the A320 commercial jet family.

As LNC reported in November, it’s hardly a coincidence that Shelby—a supporter of Airbus in Mobile—blocked the ExIm appointments ever since.

New position, same blocking action

With the elections last year, Shelby moved on from his chairmanship of the Senate committee oversight of ExIm.

But he still will block ExIm Board appointments, an Alabama city official who knows Shelby told LNC.

Under US Senate rules, a Senator can put a “hold” on nominations for any reason that require Senate approval.

Shelby appears ready to continue his hold.

Ironically, Boeing is a big employer in Alabama—but in defense, not commercial aerospace.

Market, other factors emerging, creating Boeing 787 concern

Subscription Required

Introduction

Jan. 4, 2017, © Leeham Co.: Despite a rosy picture painted by Boeing about the future of the 787 and the ability to recover more than $29bn in deferred production

Boeing photo.

and tooling costs, there are signs that cause concerns over the next 3-5 years.

Summary
  • Near-term production outlook solid, weakness begins in 2020, big gap in 2021.
  • Boeing doesn’t see wide-body sales recovery until next decade.
  • Company foregoes increasing 787 accounting block; sales won’t support it.
  • Market talks about deferring 787s.

Read more

ExIm remains blocked by one US Senator

Subscription Required

Introduction

Aug. 18, 2016, © Leeham Co.  The US Congress reauthorized the ExIm Bank after a long effort to kill the institution. But the Bank remains out of business for transactions for more than $10m. This means Boeing can’t use the Bank for export financing for purchasers of its 7-Series airplanes.

Why?

Because the Bank doesn’t have a quorum for its Board of Directors.

Why?

Because one US Senator is blocking appointments that would put the Bank back in business.

Who is this Senator?

US Sen. Richard Shelby (R-AL) is the lone senator blocking the US ExIm Bank from approving credit support for more than $10m. Boeing was a large beneficiary of ExIm support. Shelby is a supporter of the Airbus A320 plant in Mobile (AL). Photo via Google images.

Richard Shelby of Alabama. Shelby once supported ExIm Bank. Now he doesn’t.

According to news reports, Shelby became a convert to the extreme right’s view that ExIm is a form of corporate welfare and Boeing is its primary recipient. Boeing doesn’t need this support, Bank opponents say.

LNC believes there might be another reason.

Alabama is where Boeing rival Airbus opened an A320 assembly plant last year.

Summary

  • Airbus had an advantage over Boeing with ExIm Bank shut down—until Airbus ran into its own export financing issues.
  • Boeing has a defense unit in Huntsville (AL).
  • Emerging Boeing rival Bombardier retains export credit financing support.

Read more

Pontifications: Airbus, Boeing, Bombardier and export credit support

Hamilton KING5_2

By Scott Hamilton

April 18, 2016, © Leeham Co.: Export Credit for airliners was back in the news last week, with the US taking aim at the prospect of Canada’s agency supporting sales of the Bombardier C Series to the US and France and Germany suspending export credit support for Airbus airplanes.

The week before, Dennis Muilenburg, the CEO of The Boeing Co., testified before Congress that although the US ExIm Bank was reauthorized, Senate action—or more accurately, inaction—on confirming members of the ExIm Board of Directors has kept the agency shut down for new deals. There isn’t a quorum of members on the Board to approve new deals.

Read more

ISTAT Day 1: Leahy’s biggest fear: producing enough planes to meet demand

Feb. 29, 2016, (c) Leeham Co: Aircraft lessors financed 48% of the Airbus deliveries in ISTAT-logo_no_tag-(2c)2015, with direct sales and sale-leasebacks, says John Leahy, chief operating officer customers for Airbus.

  • We’re at the 2016 ISTAT AGM in Phoenix and will be reporting today and tomorrow on presentations and news from the sidelines.

“Lessors are a key and integral part of our strategy,” Leahy said. Airbus only financed 2% of its own products last year. Export Credit Agencies financed only half the numbers of Boeing, he said.

Leahy does not see a downturn any time soon.

Read more

Pontifications: Talk about government interference in private industry; book review of United “Flight 232”

  • There are many topics on which to comment, n one of which requiring a full Pontification, so today’s column is going to be a bit of a free association.

By Scott Hamiltn

By Scott Hamilton

August 10, 2015, (c) Leeham Co. Government interference: While right wing Republicans and Tea Party members decry supposed ExIm Bank interference with private industry, there is now a bill in Congress to sell millions of barrels of oil from the USA’s Strategic Oil Reserve in order to raise $15bn.

Unlike the ExIm Bank’s participation in the global capital markets, Congress’s action–if it passes–won’t create  jobs. It will compete with jobs and companies trying to sell oil in the global market place. It will help drive prices down.

Once more, the hypocrisy of Congress is glaringly evident.

Bombardier: Pierre Beaudoin should have left Bombardier last February when he relinquished the title of president and CEO to Alain Bellemare instead of assuming the chairman’s title. This is the opinion of a few people with whom I’ve talked just in the last week.

Furthermore, the Beaudoin family needs to step out of the company entirely and give up its voting control (it has 54% of the voting stock) if BBD wants to attract new investors, says one Canadian aerospace analyst who hasn’t written any of this publicly.

“I can’t even see how they’re going to raise money for BT. I can’t imagine European investors would like subordinate shares either. Equity markets won’t be supportive unless the Family gives up control,” this analyst wrote me.

Read more