Boeing lobbying for Exim reauthorisation

04 November 2015

Company executive says bank’s suspension puts competition at advantage

  • Boeing top beneficiary of Exim’s loan guarantees
  • Middle East to account for 8 per cent of global demand volume of 38,000 aircraft units between 2014 and 2034

US-based aircraft manufacturer Boeing is trying to convince lawmakers to reauthorise the operation’s of the US Export-Import Bank (Exim), citing that its suspension puts it at a disadvantage against competition.

Exim provides loan guarantees for the purchase of US products and services overseas.

Boeing has been the main beneficiary of Exim’s financing operations over the years. It funded $900m-worth of Boeing aircraft purchases from UAE aviation companies in 2013 alone, according to the US’ Mercatus Center.

“We are working hard at making our case known [to our lawmakers]…Exim’s closure definitely puts our competition at an advantage,” said Randy Tinseth, vice present for marketing at Boeing’s Commercial Airplanes division.

Both France’s Airbus and Boeing have a strong pipeline of orders from airlines in the Middle East. Dubai-based Emirates Airline alone has 196 aircraft units on order with Boeing and 77 with Airbus.

Apart from Emirates, Qatar Airways and Etihad Airways, smaller airlines such as Gulf Air and Oman Air are expanding their fleets. Even the loss-making Kuwait Airways is expected to expand its fleet while it awaits final government approval for its privatisation.

Boeing, in its annual 20-year demand forecast, had indicated that the Middle East will need some 3,180 new aircraft units, with an estimated value of $730bn in the period between 2014 and 2034.

In comparison, the global demand during the same period is forecast to reach 38,000 aircraft units worth some $5.6 trillion.

While the Middle East will account for 8 per cent of the global demand volume, it is expected to account for 13 per cent of the demand value. This implies that Middle East airlines will be purchase more expensive aircraft models compared to the global average .

Some 30 per cent - or 960 planes - of the total forecast demand in the Middle East is to be accounted for by replacement aircraft units.

Some 44 per cent of the projected regional demand is to be accounted for by single-aisle planes, similar to the Boeing 737 Max which will enter service in 2017.

Oman Air has 20 737 Max aircraft on order and Tinseth expects Boeing to receive orders from other airlines, due primarily to its fuel efficiency features.

The next largest share of the forecast demand will be for medium wide-body planes (28 per cent). The rest is accounted for by small wide-body aircrafts (18 per cent), small regional jets (1 per cent) and large wide-body aircraft (9 per cent).

The strategy of most Middle East carriers to cater to long-haul flights underpins the region’s higher than average demand for large wide-body aircraft. Demand for these aircraft comprises only 1 per cent of the global demand over the next 20 years.

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