Emirates airline says Ex-Im Bank not critical for its plane financing

September 6
4:26 AM 2014

Emirates, Dubai's flagship airline, would not have trouble buying planes from Boeing Co (BA.N) even if the U.S. Congress fails to renew the U.S. Export-Import Bank's charter later this month, a senior company executive said on Friday.

The Ex-Im Bank, which provides financing to help U.S. businesses sell products overseas, is only one of many financial sources that Emirates [EMIRA.UL] draws on when buying planes, Hubert Frach, the airline's senior vice president for commercial operations in the West, said in an interview with Reuters.

"Ex-Im is not an exclusive tool for Emirates to finance the aircraft," Frach said. "Our aircraft are financed by various concepts."

Emirates is one of the biggest buyers of Boeing airplanes and in November placed a record order for Boeing Co's (BA.N) next-generation 777X, a fuel-efficient version of the company's best-selling widebody plane.

Emirates' growing U.S. service competes with U.S. carriers for international travelers. Delta Air Lines (DAL.N) has opposed renewal of the Export-Import Bank's authority to operate, which expires Sept. 30, saying it creates an uneven playing field by cutting the cost of aircraft for foreign rivals.

Reauthorization of the bank has been the subject of an intense debate in Congress

Frach underscored that Emirates's service and its large Boeing orders support substantial job growth in the United States.

Emirates now flies to nine U.S. cities and plans to fly larger-capacity jets to several of these destinations because of high U.S. demand.

Frach said Emirates fills nearly 90 percent of the seats on many of its U.S. flights - a number competitive with domestic carriers' load factors. Delta Air Lines (DAL.N) said its load factor for international flights during the month of August was 88.2 percent.

"You look at demand. You see that your load factor from day one is in the high 80s if not in the 90s, and you are confident that especially in peak summer months, you can easily also fill a bigger aircraft," Frach said.

Less than five months after starting service to Boston in March, Emirates upgraded its Boston jet to a Boeing 777-300 from a Boeing 777-200, which has 88 more seats, because of demand, Frach said.

Emirates also plans to roll out the Airbus A380 - a double-decker with showers for first-class passengers - on its service to Dallas starting Oct. 1. It will do the same for San Francisco starting Dec. 1 and for Houston two days later.

Emirates faces competition from Etihad Airways, which plans to offer a three-person suite with butler service on its London-Abu Dhabi route this December.

Frach said Emirates is considering a similar idea, but he could not disclose details of its launch date or design.

"Competition to us is nothing new," Frach said. "We believe that (our high quality product) pays off not only in customer acceptance, it pays off also in revenue."

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