Armageddon Without Corporate Welfare?

Armageddon Without Corporate Welfare?

Does the Boeing Corporation really need the U.S. Export-Import Bank?  Few would know the answer to that question better than Kostya Zolotusky, Boeing’s managing director for capital markets and leasing, or so you would think.

In a recent interview with Bloomberg Government, Mr. Zolotusky sounded apocalyptic when asked about the potential expiration of the Export-Import Bank:  “How would you plan for an Armageddon? We’re not planning for an Armageddon. You can’t plan for an Armageddon.”

The $93 billion company’s second quarter 10-Q filing with the U.S. Securities and Exchange Commission paints a very different picture about the Bank’s pending expiration:  

“…we may fund additional commitments and/or enter into new financing arrangements with customers. Certain of our non-U.S. customers also may seek to delay aircraft purchases if they cannot obtain financing at reasonable costs. We continue to work with our customers to mitigate risks to the timing of future deliveries and are assisting with alternative third party financing sources.”

This tempered outlook is more in line with what Mr. Zolotusky told reporters 14 months ago.  The Wall Street Journal explained the company “could find alternative funding for customers that wouldn’t require it to boost its support of aircraft sales” if the Bank expired.  

By most accounts, including Boeing’s, economic conditions have continued to improve since then even as Mr. Zolotusky’s rhetoric has become desperate and reckless.

The company’s forecast of the aircraft financing environment alluded to the increased availability of private commercial financing.  “The 2014 aircraft finance markets should be healthier and more balanced,” Boeing predicted, and “higher fees and equity requirements should continue to drive down [Export Credit Agency] demand.”  

For emphasis, the report added, “Financing sources for Boeing deliveries in 2014 reflect the trend of declining reliance on export credit, rapid expansion of capital markets, and balanced sources of lessor funding.”  In other words, capital markets, among other forms of financing, would be there to fill the gap created by the expiration of the taxpayer-backed bank.  Case in point, Emirates airlines, which has received nearly $3.4 billion from Ex-Im since 2007, said it didn’t need the bank to purchase Boeing planes.

Even the highly cited Standard and Poor’s report suggested the expiration of the Bank wouldn’t harm “Boeing’s credit quality or ability to make planned deliveries in 2014 and 2015.”  Those planned deliveries are expected to break yet another record this year.

The inconsistency of Boeing’s arguments is alarming, and raises real doubts about whether policymakers can trust the legions of lobbyists working the corridors of Congress on behalf of the multinational aeronautical giant.

If policymakers really want to help Boeing, its employees and all American families, they should focus on economic growth, not dubious export subsidies.  Those pro-growth policies will create opportunity for all, not merely extend favoritism to a handful of politically connected companies that cry wolf when their favorite handout is about to expire.  

Michael A. Needham is the chief executive officer of Heritage Action for America (heritageaction.com).


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