Agreement in principle on the recasting of “export credits to aeronautics”

The French government on Wednesday welcomed a “balanced” agreement, which “takes into account the interests” of Airbus.

An agreement was reached Tuesday evening between Europe, the United States, Brazil, and Canada to reform the support mechanism of aircraft sales said “export credits to aeronautics,” announced Wednesday a spokesperson for the Organization for Economic Co-operation and Development (OECD) in Paris, where the negotiations took place. “There is an agreement in principle between the countries that have negotiated. The agreement was sent to governments for ratification. We expect ratification before January 20 for entry into force on February 1,” said the spokesman OECD, Stephen Dibiaso.

The export credit to aeronautics, already revised in 2007, allows foreign airlines to benefit from a government loan guarantee to facilitate the purchase of aircraft from the European Airbus and the American Boeing. The aim of the recast agreement is to create and maintain a system that is more reflective of market conditions “that allows manufacturers, airlines and governments to match the playing field”, according to the terms of the agreement.

EQUAL GAME SYSTEM

Negotiations lasted for months between representatives of Brazil, Canada, the United States and Airbus countries – Germany, Spain, France and the United Kingdom – in the presence of the European aircraft manufacturer Airbus and its American competitor Boeing. The redesign of the device was made necessary to better take into account the new competitors of Airbus and Boeing: the Brazilian Embraer and the Canadian Bombardier. It was also claimed by European and American companies, including Delta Airlines, Air France-KLM, Lufthansa, British Airways, previously excluded from this scheme. The latter denounced the advantage that this device created unduly in favor of foreign carriers, including those flourishing Gulf countries or Asia.

Among the main points of the agreement is the homogenization of the financing conditions for regional and long-haul aircraft. Premiums (organizations such as Coface in France, Euler in Germany and Exim Bank in the United States), which were much lower than the rates prevailing in the financial markets, will be further modeled on them. During the crisis, fixed rates were excessively low, up to three times lower, said a source close companies. “We have loosened the bolts so that the aeronautics sector does not collapse (…), which has increased the exposure of the state to risk, recognized a European source, so we must close the parenthesis, and that the limits in which we can help export are closer to the market. ” No quantitative restrictions will be applied to programs of export credit agencies. And the agreement provides mechanisms to amortize significant movements in the market.

A “BALANCED” AGREEMENT

The French government on Wednesday welcomed a “balanced” agreement, which ” takes into account the interests” of Airbus. “The new agreement unifies the conditions of financial support for all civil aircraft, ” said in a statement the Minister of Economy, Christine Lagarde, and the Secretaries of State for Foreign Trade and Transport, Pierre Lellouche and Thierry Mariani.

According to them, “this new regulatory framework takes into account the interests of the European manufacturer Airbus, which will continue to benefit from the State guarantee for part of its exports and will be subject, in matters of financing, to the same rules of the game as his competitor Boeing”.

“The agreement will make it possible to reduce the gap between the level of premiums and the evolution of the market, and to create a better balance between the French, German and British airlines and their competitors,” they say. Ministers say it will allow “the concerned states, including France, to better control their exposure to export risk in this sector”. Finally, they stress that “more balanced rules will now apply to direct lenders, ie to the States which make the funds themselves available to exporters, unlike France, which limits its intervention to the guarantee of bank loans”.

“We welcome an agreement that allows export credit agencies to continue to be a tool for renewing fleets around the world while providing equal ground between manufacturers,” commented Nigel Taylor, vice president of financing. sales at Airbus.