Michael O'Leary/AP - Boeing's 1,000th 777 aircraft rolls out of the jet maker's factory in Everett, Wash. on Feb. 14. President Obama will tour the factory Feb. 17 to press his plan for building a stronger economy.
Air India got U.S. government support and used it to vanquish the competition. With the help of cheap loans backed by American taxpayers, the airline bought Boeing 777s — manufactured in the United States by American workers — and then launched nonstop service between New York City and India’s business capital, Mumbai.
The only problem was that the competition on that route was Delta, which says it was forced to abandon the nonstop daily service it had pioneered two years earlier.
The collision between the interests of the nation’s largest airline and one of its largest manufacturing companies illustrates the trade-offs facing the country as leaders weigh how to create a more durable economic recovery.
On Friday, President Obama toureda Boeing factory in Everett, Wash., where those wide-body planes are made, and pressedhis plan for building a stronger economy. Key elements include tax breaks to spur domestic manufacturing and a drive to increase exports — in part by helping foreign companies buy American products.
But, experts say, Obama’s activist approach to the economy could put him in the position of picking winners and losers. That is likely to mean tens of billions of dollars in additional business for Boeing — a company that has helped power the economic recovery and whose chief executive, W. James McNerney Jr., chairs Obama’s export advisory panel — but also new challenges for U.S. carriers.
“A clash is inevitable,” said Richard L. Aboulafia, a vice president with Teal Group, a firm that analyzes the aerospace industry. “Do you want to help manufacturers, or do you want to ensure a level playing field for airlines? It’s an extremely tough call.”
The clash is already playing out in Washington, where the airline industry late last year sued the federal Export-Import Bank to stop $3.4 billion in new loan guarantees being provided to Air India for the purchase of aircraft. (Not all airlines participated in the suit.)
The Ex-Im Bank, a federal agency, helps foreign firms buy American-made products by offering cheap loans directly to the firms or providing them loan guarantees — which can make it less expensive for the companies to borrow from private lenders, because the U.S. government stands behind the loan.
The airline industry’s lobbyists also have enlisted the support of top Republicans to limit the availability of low-cost financing for exports.
Lobbyists for major manufacturers such as Boeing and General Electric are fighting back, warning that if the agency does not expand its financing program in the next month or two, export-led growth could suffer.
Boeing is the behemoth of the export industry and for years has been a top beneficiary of Ex-Im’s programs. According to the lawsuit, between 2000 and 2010, the bank provided more than $52 billion in guarantees to help foreign airlines buy Boeing aircraft, providing the financing for 950 jet planes. In the past few years, about 60 percent of all Ex-Im’s loans have gone to benefit Boeing, while a third of the company’s jets delivered to customers were backed by Ex-Im support.
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