US airlines turn on Emirates over credit

A fresh salvo has been fired in the battle among airlines to secure financing after a US trade body said Emirates Airline should be banned from accessing US export credit. The comments are likely to further ignite tensions among global and Middle East carriers at a time when sources of funding are drying up because of the uncertain global economic outlook. Emirates planned to tap US export credit as one of the funding avenues for its US$18 billion (Dh66.1bn) purchase of 50 Boeing 777 aircraft, Sheikh Ahmed bin Saeed Al Maktoum, the chairman and chief executive of Emirates Airline, said last week. In addition, the airline would use EU export credit, operating leases, commercial asset-backed debt, as well as Islamic financing, he said. But the airline\'s plans have attracted the wrath of the Air Transport Association of America (ATA), which represents the interests of US carriers. \"Emirates has ample access to commercial credit and capital sources and should not qualify for Ex-Im Bank [Export-Import Bank of the US] support,\" said Steve Lott, the vice president of communications at ATA. \"Export credit support should be reserved for companies that have difficulty accessing commercial credit due to country-specific political or structural risks. Emirates does not fall into this category.\" No one from Emirates was available yesterday for comment. Emirates and other regional carriers traditionally rely on export credit-backed deals for between 14 and 24 per cent of their overall funding streams. ATA has been frequently outspoken in its views about overseas airlines\' financing as it seeks to defend US carriers. Earlier this month it filed a lawsuit against the Ex-Im Bank in a bid to block a multibillion-dollar support package for Boeing jets ordered by Air India. ATA argues Ex-Im Bank\'s actions frequently distort global competition and fall short of its obligations by law. Many global airlines are facing a trickier time securing aircraft finance as European banks tighten their credit exposure in response to the euro-zone sovereign debt crisis. Tim Clark, the president of Emirates, was quoted in September as saying some French banks were showing signs of reluctance to lend. Emirates and other regional carriers have previously had to defend themselves against accusations from European flag carriers that they receive subsidies from their governments. In a bid to appease US and European carriers, new rules imposed by the Organisation for Economic Co-operation and Development earlier this year are likely to raise surcharges and could also increase interest rates on deals backed by export credit agencies in the US and Europe.