Yesterday, the world’s leading aerospace company held its first quarter earnings conference call. A Reuter’s headline sums up the call: “Boeing cash register rings again, sending shares higher.” While the call was good news for investors it was notable for what it was missing: any reference to the Export-Import Bank.
As Crain’s Chicago Business noted last fall, Boeing has come “under attack in recent years for using low-interest federal export financing to help sell planes to foreign airlines, which end up competing against U.S. airlines that can’t get the same terms to buy their planes.” That financial support comes from the aforementioned Export-Import Bank, which “funneled 82.7 percent of its taxpayer-backed loan guarantees” to Boeing in 2012.
The Export-Import Bank is frequently called the “Bank of Boeing.” And with its expiration pending, one would have thought investors on yesterday’s call would have mentioned it. Why the silence? Perhaps because the question was answered nine months earlier.
Last August, The Wall Street Journal reported on remarks made by the managing director of Boeing’s finance arm. According to the Journal, Kostya Zolotusky “said he was confident the company could find alternative funding sources for customers that wouldn’t require it to boost its support of aircraft sales.”
Fred Hochberg, the head of the Export-Import Bank, echoed those sentiments earlier this year. In the words of Philadelphia Inquirer reporter Joe DiStefano, Hochberg explained “Big commercial jet makers like Boeing tend to arrange their own financing.”
There are very good reasons to believe that Boeing can continue to thrive without low-interest federal export financing backstopped by taxpayers. One could even infer from their comments—or the lack thereof—that Boeing isn’t overly concerned about the matter.
The same cannot be said for others in business community, though. Bloomberg quoted an official from the National Association of Manufacturers, who characterized the pro-Bank push as “an all-hands-on-deck effort” from the business community.
As the Export-Import Bank’s annual conference kicks off today, so too does the real debate over the future of the Bank. All hands may be on deck, but if the pro-Bank crowd cannot explain why Boeing doesn’t need the “Bank of Boeing,” this may be their last conference. So party up!