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EIB-2014-0034 - Air China - Export of Boeing 737, 747, and 777 Aircraft to China
EIB-2013-0024 - Air China - Export of Boeing 777 and Boeing 737 Aircraft to China
EIB-2013-0038 - Norwegian International - Export of Boeing 787 Aircraft to Norway
EIB-2013-0057 - Emirates - Export of Boeing 777 Aircraft to the United Arab Emirates
EIB-2014-0028 - LATAM Airlines - Export of Boeing 787 Aircraft to Chile
EIB-2014-0040 - Avianca - Export of Boeing 787 Aircraft to Colombia
Application Number AP088793XX for a Final Commitment for the Export of Boeing 737, 747, and 777 Aircraft to China
August 1, 2014
Air China is a large and rapidly growing airline. Its total fleet (including its subsidiaries) has grown from 151 aircraft in 20045 to 477 passenger aircraft in 2013, an increase of more than 300%.6 Air China now has one of the youngest fleets in the industry, with an average aircraft age of 6.33 years, well below the average age of almost all U.S. airlines. Much of this growth has been underwritten by the Bank. Just since 2011, Air China has sought and received over $1.8 billion dollars in Bank authorizations. The commenters predicted in their most recent comments on an Air China transaction that the Bank’s subsidies would help Air China boost its presence in the United States. Those predictions have come true. This past June, Air China announced a new non-stop service between Washington, D.C. and Beijing, a route that the commenters had previously estimated would cause U.S. airlines to lose somewhere between 9,500 and 24,850 passengers and between $10.4 and $29.6 million in annual revenues if flown daily. This Washington-Beijing route comes in addition to the non-stop flight between Hawaii and Beijing that Air China commenced earlier this year (a route currently serviced by Hawaiian). In total, Air China now serves six cities in the United States (New York, Los Angeles, San Francisco, Honolulu, Houston, and Washington), with half of these destinations having been added since 2013.
Counsel: Kellogg, Huber, Hansen, Michael Kellogg, 202-326-7900 for Delta / Cooley, Jonathan Hill, 202-776-2725 for Hawaiian / ALPA, Russell Bailey, 202-797-4086
Latin America is a critical market for airplane sales. Over the next 20 years, the region’s carriers will require 2,900 new airplanes valued at $300 billion. Airbus is aggressively pursuing every opportunity in Latin America, offering the region’s airlines access to not one but three export credit agencies and access to ECA credit can often be the deciding factor in a campaign. LATAM, an airline group comprised LAN, TAM, and their subsidiaries, has hubs in Brasilia, Rio de Janeiro, São Paulo, Lima, and Santiago. The group is the largest potential airplane purchaser in Latin America, yet is already a significant Airbus customer. For Boeing to fairly compete for sales to LATAM and other airlines, its customers must have access to ECA financing from the Bank.