Bamby
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Norwegian Air Shuttle, rollicked by the coronavirus, is reportedly on the brink of collapse. That’s bad for the company’s employees, passengers, and shareholders. It also could be bad for the U.S. taxpayer.
When Norwegian Air Shuttle bought Boeing jets in 2015, the sale was financed by French banks and Goldman Sachs. But to grease the skids, the U.S. Export-Import Bank provided a $300 million loan guarantee. So if Norwegian goes under and can’t pay its debts, the U.S. government will cover some of Goldman's losses.
As you might imagine, many foreign airlines are struggling amid the coronavirus shutdown in travel. One consultancy warns that most of the world’s airlines could declare bankruptcy this spring.
Subsidizing Boeing jets has generally been the Ex-Im Bank’s main activity. Typically, about 40% of all its financing supports Boeing exports. That’s why the agency has earned the nickname "Boeing’s Bank."
As a result, airlines in China, Turkey, Bangladesh, Canada, Mexico, and all over the world have benefited from U.S. taxpayer-backed financing to buy Boeing jets in recent years. Many of them still owe their lenders, meaning the U.S. taxpayer is still exposed via the Ex-Im Bank.
There’s a decent chance some of those foreign airlines will default on some debt payments. That could result in the Ex-Im Bank having to make the creditors whole.
The good news is that the Ex-Im Bank’s financing is collateralized. If an airline simply defaults, it can at least take the planes. Whether Uncle Sam will have any luck unloading a Boeing these days is another question.
Washington Examiner
When Norwegian Air Shuttle bought Boeing jets in 2015, the sale was financed by French banks and Goldman Sachs. But to grease the skids, the U.S. Export-Import Bank provided a $300 million loan guarantee. So if Norwegian goes under and can’t pay its debts, the U.S. government will cover some of Goldman's losses.
As you might imagine, many foreign airlines are struggling amid the coronavirus shutdown in travel. One consultancy warns that most of the world’s airlines could declare bankruptcy this spring.
Subsidizing Boeing jets has generally been the Ex-Im Bank’s main activity. Typically, about 40% of all its financing supports Boeing exports. That’s why the agency has earned the nickname "Boeing’s Bank."
As a result, airlines in China, Turkey, Bangladesh, Canada, Mexico, and all over the world have benefited from U.S. taxpayer-backed financing to buy Boeing jets in recent years. Many of them still owe their lenders, meaning the U.S. taxpayer is still exposed via the Ex-Im Bank.
There’s a decent chance some of those foreign airlines will default on some debt payments. That could result in the Ex-Im Bank having to make the creditors whole.
The good news is that the Ex-Im Bank’s financing is collateralized. If an airline simply defaults, it can at least take the planes. Whether Uncle Sam will have any luck unloading a Boeing these days is another question.
Washington Examiner
