The French government is to inject €5bn (US$6.5bn) into banks to allow the financing of export contracts in the aeronautical sector. This move is directly aimed at helping Airbus and its parent company, European Aeronautics Defence & Space (EADS) during the current credit crunch. Airlines that are finding it difficult to line up financing for their purchases of Airbus aircraft will also benefit from this aid.
According to a Finance Ministry official, this amount is from a total of €7bn that France is making available to exporters.
The funds will be made available to banks with a record of lending to the aerospace industry. The French business daily Les Echos said four French banks that lend heavily to the aviation industry – Credit Agricole, BNP Paribas, Societe Generale and Natixis – are targeted under the plan.
Banks with airline clients unable to afford the purchase of new aircraft will be able to approach a newly created state-owned financing corporation, the Societe de Financement de l’Economie Francaise, which will provide guarantees on loans for up to the €5bn limit.
Although not presented as a direct bailout, the plan is the first significant package directed at the aerospace industry, one of France’s biggest export earners. According to a spokesperson from EADS, these new measures will allow the company to consolidate the delivery of planes ordered for 2009.
Airbus is the world’s largest producer of civil jetliners, ahead of rival Boeing. Both Airbus and Boeing are facing a drastic drop in orders this year as their customers struggle with slowing air traffic and difficulties raising credit to pay for new jets.
Meanwhile, a spokesperson for Export-Import Bank of the United States (US Ex-Im) has stated that the bank anticipates that it may increase its guarantees for sales of Boeing jets by nearly 50% up to US$9bn, and that it has the capacity to do so. However, the contact added that this move will be based on knowledge and conditions of the market and that it has not yet been finalised.
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