Emirates Says Doesn’t Need $900 Million from Ex-Im Bank to Buy Boeing Planes

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A senior official of one of Boeing Co.’s (NYSE: BA) largest customers, the United Arab Emirates’ Emirates airline, said on Friday that the company could continue to buy aircraft from Boeing even if the U.S. Congress does not renew the lending authorization of the U.S. Export-Import Bank, which expires on September 30. Last year Boeing received loan guarantees worth $7.9 billion from the Ex-Im Bank, and some $900 million of those guarantees were used for Emirates.

This comment comes at a particularly awkward time for Boeing and its lobbying efforts to secure a reauthorization of the Ex-Im Bank, which have cost the company more than $4 million in recent months. Boeing Capital Corp, the aircraft maker’s financing arm, could see demand for new financing rise from about $3.5 billion to as much as $9 billion, according to S&P. That is capital that Boeing would not have available to develop new planes.

Emirates’ senior vice-president for commercial operations in the West told Reuters that the Ex-Im Bank is just one of many financing sources the airlines uses to purchase new planes, “Ex-Im is not an exclusive tool for Emirates to finance the aircraft. Our aircraft are financed by various concepts.”

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Why did Emirates choose to say something like this now, at a critical juncture for Boeing and the Ex-Im Bank? Aerospace research firm Leeham suggests an answer:

Boeing’s deal for the 150 777Xs with Emirates nearly fell apart over the ambiguity over the Bank. We’re also told Boeing agreed to backstop the Emirates deal.

Boeing cannot afford to lose Emirates as a customer. At the current list price of $388.7 million for a 777-9X, the 150 planes Emirates ordered are worth more than $58 billion.

Boeing announced a firm order Monday morning for 100 of its new 737 MAX aircraft and options for 100 more from low-cost carrier Ryanair Holdings PLC (NASDAQ: RYAAY). Even if Ryanair buys all those planes and takes all those options, the total value of that deal is around $22 billion at list prices, less than half the value of the Emirates deal.

Boeing’s shares traded up nearly 2% to $127.16 Monday morning on the strength of the Ryanair order. The stock’s 52-week range is $105.56 to $144.57.

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