How Many $6.6 Billion Orders Will Boeing Take Without the Ex-Im Bank?

The buyer is Panama’s Copa Airlines, which previously ordered 14 Next-Generation 737-700s and 59 Next-Generation 737-800s. All the -700s and 39 of the -800s have already been delivered to the airlines.

The order will not affect Boeing’s order book because the planes had already been included in the company’s count but not identified by customer name. Boeing’s order book through the end of March shows an unidentified order for 61 737 MAXs placed in May 2013.

At the end of 2013, Copa’s latest available Form 20-F annual report filing listed $913.5 million in long-term debt. Of that total, $714.9 million was “outstanding indebtedness that is owed to financial institutions under financing arrangements guaranteed by the Export-Import Bank.” That refers, of course, to the U.S. Export-Import Bank, which is in danger of losing its charter at the end of June.

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How much of the new $6.6 billion order from Copa Airlines is guaranteed by the Ex-Im bank is not known and probably will not be until the next annual report from the bank. But Copa’s revenues in 2013 totaled just $2.61 billion, so an investment of about 2.5 times that amount is going to stretch out over many years and almost certainly requires the airline to find a partner to share the risk.

It is a fair bet that the Ex-Im Bank is guaranteeing at least some of the billions Copa is paying for its new Boeing planes. Because Copa had already committed itself to Boeing, it is also a fair bet that the airline would not have ordered A320neos from Airbus even if Ex-Im guarantees were not available.

Being at a competitive disadvantage with Airbus, which gets export financing help from both Germany and France, on new business, could be problematic for Boeing, which most likely would have to provide the guarantees itself. Boeing is a $100 billion company, but unlike the U.S. government it cannot tax and it cannot print money. That means there is a cost involved with offering guarantees that the company and its stockholders very likely will have to absorb. Boeing could raise its prices, of course, but that makes it less competitive with Airbus.

The celebration in Panama City may be the first notes of the Ex-Im Bank’s swan song.

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