Delta: Grab a mirror before attacking Export-Import Bank
Washington is a twisted city, as Delta Airlines lobbyists press Congress not to reauthorize the Export-Import Bank before its current lease on life expires, it is banking profits from its own deals from Ex-Im and its sister lending facility in Canada.
Delta’s opposition to Ex-Im, the New Deal creation that finances international trade other lending institutions turn down for financial or political reasons, is well known on Capitol Hill. There its agents have gone toe-to-toe with agents of the U.S. Chamber of Commerce, who have advocated for the bank as a vital cog in country’s economic gears.
In his April 2012 address “Future of Aviation Industry” to U.S. Chamber of Commerce, Delta CEO Richard Anderson was emphatic that the Export-Import put his company at a severe disadvantage. “If you don’t believe me, I can’t convince you otherwise. I’m just telling you the CEO of the Delta Airlines is telling you it really hurts.”
Anderson’s example was the $3 billion loan guarantee to Air India that allowed it to buy 30 wide-body aircraft from Boeing and then compete head-to-head against Delta’s Indian routes at fares $300 to $400 below his airline’s fares.
In the speech, the CEO said he had no objection to loans for narrow-body aircraft, but his lobbyists have not been as nimble.
Delta lobbyists are attempting take advantage of conservative opposition to Ex-Im, to block loans for wide-body aircraft to foreign airlines that complete with Delta. Delta’s sudden conversion to conservative principles may seem strange to conservatives who have watched Delta receive government bailouts twice, subsidies from foreign governments, loans from Ex-Im itself.
Delta’s lawyers have been active, too. In June, a federal judge dismissed its lawsuit against the bank for the Air India deal, but its April lawsuit against the bank’s financing deal for Korean Air is still in the courts.
Suing Korean Air is where it gets awkward for Delta’s war against the Export-Import Bank, because the airline is a member of the Sky Team alliance international partnership of airlines of which Delta is a founding member.
The Sky Team partnership offers passengers a network of more than 1,000 destinations to 178 countries, which certainly benefits Delta—and thus, it is the beneficiary of Ex-Im stepping into the breach on behalf of at least six of the 19 members.
Among the six, there are AeroMexico, an airline that in 2012 Delta invested $65 million. Another one is Gol Air Transport, in which Delta invested $100 in 2011.
Then, of course, there is Delta.
In May, Gol’s subsidiary VRG Linhas Aereas received a $45 million loan from the Export-Import Bank for its maintenance contract with Delta’s own subsidiary Delta TechOps. In effect, Delta fixed it so the bank it loathes greased the skids for the airline to do business with itself.
If the last example was familial, the next one is familiar. Five weeks ago, Delta closed on a deal to buy 40 Bombardier CJ900 narrow-body airliners from the Canadian aircraft manufacturer with $500 million to $1 billion in below-market financing from Canada’s export subsidy bank.
Remember, Anderson said he has no problem with government-supported purchasing of narrow-body jetliners. Apparently, he has does oppose government-support to Sky Team partners that he does not have an ownership stake and seat on the board.
Most people oppose government interference in the marketplace because of its arbitrary picking of winners and losers. It seems Delta, having been picked a winner, becomes arbitrary when another company gets its turn in line.
For all its faults, the Export-Import Bank, unlike, say the Park Service, turned over to the Treasury slightly more $1 billion from what a private bank would call profit It may come to pass that instead of de-authorizing the bank it can be privatized, or if it is reauthorized, additional reforms are put in place.
Whatever happens, nothing positive will happen until Delta, and others, come clean about the subsidies they have received along the way.
Reform is not about keeping your candy and taking candy away from the other guy.