Airlines Claim Ex-Im Bank’s Foreign Loans Hurt U.S. Workers

WASHINGTON (CN) - Two domestic airlines and the Air Line Pilots Association asked a federal judge to strike down the U.S. Export-Import Bank's plan to loan tens of millions of dollars to foreign airlines to help them buy Boeing planes.

Delta Air Lines, Hawaiian Airlines and the pilots' union, or ALPA, sued the Ex-Im Bank and its board of directors in Federal Court.

They claim the foreign loans will hurt U.S. businesses and workers, and that the Ex-Im Bank's new procedures and guidelines that determine the economic impact of its loans violate congressional mandate and were illegally adopted.

"The ability to buy Boeing aircraft using loan guarantees that are backed by the U.S. Treasury gives a significant competitive advantage to the favored foreign airlines," the complaint states.

About 46 percent of the bank's $106.6 billion in commitments last year was dedicated to air transportation loans and loan guarantees, an industry the bank funds more heavily than the next three industries on its books combined, according to the complaint.

Last year, U.S. District Judge James Boasberg approved the bank's guarantee of Air India's $3.4 billion purchase of Boeing planes, dismissing a lawsuit filed by the Air Transport Association of America.

While that case was being litigated, ALPA and the airlines say, Congress passed the Export-Import Bank Reauthorization Act, requiring the Ex-Im Bank to develop and make publicly available its methodology and guidelines used to conduct economic impact analyses. The law also requires the bank to respond to public comments on export transactions exceeding $100 million.

But the bank ignored comments submitted by domestic airlines and adopted new procedures that violate the Reauthorization Act and the bank's charter, according to the complaint.

"The new procedures impose screens that will exempt from substantive economic analysis a large majority (85%-90%, according to the Bank's estimates) of aircraft transactions," the complaint states. "The sheer number of aircraft transactions excluded by these screens is contrary to the Bank's statutory mandates, and the criteria the Bank has chosen for exclusion cannot be reconciled with Congress' intent."

The complaint also accuses the bank of arbitrarily trying to justify its new screens and failing to respond to public comment.

Though the previous challenge to the Air India loan is waiting to be heard on appeal before the D.C. Circuit, the domestic airlines in this case hope the court again grants them standing to sue.

"U.S. airlines and their employees, including plaintiffs, have protested that the Bank's subsidies to foreign airlines to help them buy Boeing planes cause adverse economic effects on U.S. airlines and their employees," the complaint states. "Plaintiffs content that the Bank is legally required to consider these adverse economic effects, that it has failed to do so, and that its failure to do so has led it to approve more financial assistance to airlines than it would have if it had complied with its statutory requirements."

Loaning money to foreign airlines to buy Boeing planes will hurt the U.S. airline industry, the airlines say, and by failing to account for the adverse economic impact, Ex-Im is breaking the law.

"The newly purchased aircraft that foreign airlines purchase with the Bank's assistance also give the foreign airlines competitive advantages by reducing their fuel and maintenance costs; attracting customers who wish to fly on newer, more desirable planes; and enabling the airlines to charge prices for seats on the newer aircraft that are lower than the prices that U.S. airlines must charge for seats on competitive routes on the older aircraft that make up their fleets," the complaint states.

ALPA and the airlines say the bank ignored their comments on the matter, and approved its new guidelines, which are to take effect in April.

They want the court to declare the bank in violation of the Administrative Procedure Act.

The airlines and ALPA are represented by Jonathan Hill of Dow Lohnes.

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