Is Delta Biting the Hand That Feeds It?
U.S. Export-Import Bank has said its decision today to back an $84.8 million loan to Brazilian airline Gol will benefit Delta Air Lines (NYSE:DAL), though Delta has in the past criticized the bank’s financing practices.
The bank’s board of directors approved the guarantee for Gol, or VRG Linhas Aereas SA, to ship engines from São Paulo to the U.S. carrier’s headquarters in Atlanta for servicing by Delta’s maintenance, repair, and overhaul unit, TechOps, according to a bank statement. Delta TechOps services Delta’s fleet of 775 aircraft as well as more than 150 international airline and aviation customers.
Fred Hochberg, the bank’s chairman and president, said the financing will help “sustain high-quality technical jobs for Delta employees in Atlanta.” Delta is at the center of controversy over whether or not to renew the Export-Import Bank, a federal agency that supports exports by helping overseas buyers purchase goods and services from U.S. companies. According to Senator Jim DeMint, a South Carolina Republican and founder of the Senate Tea Party caucus, the bank favors foreign airlines over U.S. carriers, such as Delta, in buying new aircraft.
Delta spokesperson Trebor Banstetter said the bank should create “a diplomatic path to find a better way to balance foreign credit agencies without damaging U.S. companies and their employees.” The lender’s decision-making needs to be more transparent, he said in an email to Bloomberg.
The bank said that under a 2010 agreement, Delta performs maintenance on Gol engines in aircraft made by Boeing (NYSE:BA). The loan guarantee covers two years of a five-year contract with TechOps.
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