The Export-Import Bank of the United States (US Exim) has announced it will guarantee a US$304mn loan from JP Morgan to Atlas Air Worldwide Holdings.
The loan, approved on October 13, will support the last deliveries of the Boeing 747 model aircraft to the borrower’s subsidiary, Atlas Air Inc, for international use. US Exim will guarantee 85% of the net contract price.
Two 747s are expected to be delivered this year, one in November and the other in December, as part of a move expected by US Exim to support 1,700 jobs and benefit suppliers nationwide.
“I am pleased to continue Exim’s efforts to support the aviation supply chain,” says US Exim president and chair Reta Jo Lewis. “Aviation transactions such as this have a far-reaching impact on our nation’s economy, helping to maintain nearly 2 million good-paying US jobs and reinforcing our dedication to small and medium-sized businesses.”
The US Exim-guaranteed aircraft will be operated by Atlas Air, which will provide pilots, maintenance and insurance as part of its services to a foreign-end user on contract, says a US Exim spokesperson.
Although Atlas Air Worldwide is a US-based company, the aircraft must qualify as an export, they say.
The aviation sector has been hard hit by the effects of Covid-19, with the sudden drop in air travel in 2020 as a result of pandemic containment measures causing a marked drop in orders for planes that year.
In a September report, Boeing forecast Covid-19 will erase two years of industry growth and projected overall jet deliveries by all manufacturers – not only Boeing – would amount to just 19,330 by 2030. The estimate was a 7% drop from the 20,550 deliveries it predicted in its 2019 market outlook.
Earlier this year, US Exim bolstered its support for the domestic aviation manufacturing industry by renewing a US$450mn supply chain finance (SCF) guarantee backing sales to Boeing. Under US Exim’s SCF programme, the government agency granted a 90% guarantee for a US$500mn facility from Citi. This allowed the bank to finance payments due from Boeing to its US-based suppliers for 12 months.