April 5 (Bloomberg) -- Delta Air Lines Inc., a critic of the U.S. Export-Import Bank’s financing of wide-body jets, will benefit from a bank decision to provide an $84.8 million loan guarantee to Brazilian airline Gol, the lender said.
The bank’s board of directors today approved the guarantee for Gol, or VRG Linhas Aereas SA, to ship engines from Sao Paulo to Atlanta, the U.S. carrier’s headquarters, for servicing by Delta TechOps, the bank said in a statement.
“Ex-Im Bank’s financing will help sustain high quality technical jobs for Delta employees in Atlanta,” Fred Hochberg, the bank’s chairman and president, said in the statement.
Delta is at the center of a debate over renewal of the Export-Import Bank, an independent federal agency that supports exports by helping overseas buyers purchase goods and services from U.S. companies. Senator Jim DeMint, a South Carolina Republican and founder of the Senate Tea Party caucus, has said the lender gives foreign airlines an edge over American carriers, such as Delta, in buying new aircraft.
Trebor Banstetter, a Delta spokesman, didn’t comment on the bank’s loan guarantee for Gol. He said the lender needs to establish “a diplomatic path to find a better way to balance foreign credit agencies without damaging U.S. companies and their employees.” The bank needs to be more transparent in its decision-making, he said in an e-mail.
Delta agreed to perform maintenance on Gol engines in aircraft manufactured by Boeing Co. under a 2010 agreement, according to the bank. The loan guarantee covers two years of a five-year contract with Delta’s maintenance, repair and overhaul unit, known as TechOps, the bank said in its statement.
TechOps is largest unit of its kind in North America and services Delta’s fleet of 775 aircraft plus more than 150 airline and aviation customers globally. Airlines such as Gol typically ferry engines and other parts needing maintenance to Delta’s TechOps facility on the edge of Hartsfield-Jackson Atlanta International Airport, where Delta employees repair them and ship them back to the customer.
The maintenance business combined with other units that provide staff training, vacation planning and private-jet rentals had $900 million in revenue last year, or 2.6 percent of Delta’s total sales, according to the carrier’s most recent annual report.
The Export-Import Bank’s charter expires May 31, and it may reach its lending limit before then, according to Hochberg.
Delta is part of a lawsuit alleging that the Export-Import Bank “routinely fails to evaluate the negative impact that its commitments have on domestic industries and domestic employment.” The Air Transport Association of America Inc., a Washington-based industry group now known as Airlines for America, filed the suit in November in U.S. District Court for the District of Columbia on behalf of some of its members, including Delta.
The Export-Import Bank exists “to make sure that when American products are being sold overseas for export, that it’s a level playing field,” Hochberg said in an interview yesterday.
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