Delta Airlines and Pilots Sue U.S. Government over Financing of Foreign Airlines

Friday, January 17, 2014
Fred Hochberg, chairman and president of the Export-Import Bank of the United States

The Export-Import Bank of the United States (Ex-Im) is being sued by Delta Airlines and the pilots union over billions of dollars worth of loan guarantees and commitments provided to foreign airlines.

 

Delta and the Air Line Pilots Association contend that Ex-Im’s actions are giving overseas carriers an unfair advantage in the airline industry, and making it harder for domestic companies to compete.

 

The plaintiffs, who include Hawaiian Airlines, are upset over Ex-Im’s approval in September 2011 of $1.3 billion in loan guarantees and $2.1 billion in loan commitments to Air India so it could purchase 30 Boeing aircraft.

 

That year, Delta and the pilots union joined the Air Transport Association of America (a.k.a. Airlines for America) in a lawsuit challenging the $3.4 billion in loan supports. That legal challenge, however, was thrown out by an appeals court, prompting Delta and the union to try again with this latest civil case.

 

The plaintiffs claim that Ex-Im officials failed to provide sufficient explanation for the loan guarantees, a failure that questions the validity of its actions.

 

“The bank’s aggressive approach to aircraft financing allows foreign airlines to borrow at much cheaper rates than they could in the private market,” the lawsuit states.

 

“Cheaper financing, in turn, leads to competitive advantages for foreign airlines vis-à-vis their American competitors, shifts industry growth abroad, and puts downward pressure on American production and employment. U.S. airlines and their employees, including plaintiffs in this action, have urged the bank to reconsider its subsidies to foreign airlines because of these adverse economic effects,” the complaint further says.

 

-Noel Brinkerhoff

 

To Learn More:

Airlines Claim Underwriting of Foreign Loans Hurts U.S. Business (by Julia Filip, Courthouse News Service)

U.S. Airlines Face New Competition from Overseas (by Michael Lindenberger, Dallas Morning News)

Delta Air Lines Presses Attack on Eximbank (by Doug Cameron, Wall Street Journal)

 

Comments

Leave a comment

captcha