When the U.S. House passed the federal highway bill yesterday, included in the bill was re-authorization of the Export-Import Bank. Although the House agreed on reauthorizing the Ex-Im Bank in October, the legislation was attached to the highway bill, which took a month to get through.
This is, in part, the outcome of hard work and effort by Boeing and GE, which are big beneficiaries of the bank. This work and effort was expected of course. But with a return of the bank, an unintended consequence is that non-US airlines can tap bank funding for any Airbus’ built in Mobile. Funny how that works.
The threats of layoffs (Boeing) and moving jobs outside the US (GE) are now likely to be reconsidered. Neither firm has said anything yet. But it would bring smiles to many if Airbus were to issue a statement expressing its appreciation of the bank being re-authorized.
As I and others have written in several places, while the Daily Telegraph reporter at the Airbus Mobile line-inauguration event did get Allan McArtor to concede that theoretically non-US airlines could get U.S. Eximbank export credit guarantees for aircraft assembled in Mobile, it is actually highly unlikely that any Mobile-assembled A320-family jets will ever go to a non-U.S. customer. All production there now and in the future is intended for U.S. customers, which already have hundreds of A320-family and A320neo-family aircraft on order and will likely order many hundreds more (particularly A321neos, for which Boeing does not offer a true competitor) in the 20 years to come, according to Airbus’ latest market forecast.
Airbus expects virtually every aircraft assembled at Mobile to be an A321 or an A321neo, as U.S. airlines grow the average capacity of their mainline single-aisle aircraft to accommodate increasing traffic on existing routes to growing numbers of slot-pressured airports. If this seems an unlikely thought, remember Airbus confirmed at the inauguration event that 49 of the first 50 aircraft off the line (more than two years of production at initial assembly rates) will be A321s. Also consider that American, Delta, Frontier, Hawaiian, JetBlue and Spirit (did I miss any U.S. A321 customers?) already have large numbers of A321s and A321neos on firm order backlog. Note too that Barry Eccleston or Allan McArtor said publicly at the pre-inauguration press conference that immediately after placing an order for A320-family jets, one unnamed U.S. customer specified to Airbus that it wanted all the aircraft to come from the Mobile line. Airbus expects other U.S. carriers to require that condition as well in the future.
It’s a two way street. Airbus can arrange simple swaps. Send the US-built A320’s to European customers to take advantage of the below-market US Ex-Im financing, and supply US airlines with European built A320’s to take advantage of the below-market European Ex-Im financing. Realistically, I see little reason this would not actually happen with most airlines.
The US shouldn’t get rid of the Ex-Im bank until we talk Europe and other regions with similar banks to do the same, and then we should do so.