US court rejects blocking of bank loans to AI

New York: Paving the way for a crucial loan guarantee by the US Exim Bank to Air India, a federal court has rejected a bid by an industry body of major US airlines to block USD 3.4 billion loan to the national carrier to purchase new Boeing planes. Trade body `Airlines for America` had filed a lawsuit in November last year against the US Exim Bank opposing the loan guarantee to Air India to buy the much-awaited Boeing 787 Dreamliners, saying the financial support would put US carriers at a commercial disadvantage.

The US Exim Bank had in October last approved loan guarantees of USD 1.3 billion to support Air India`s fleet acquisition from Boeing and another USD 2.1 billion preliminary commitment to support future deliveries of the US aerospace company`s planes to the Indian national carrier. Rejecting the plea, Judge James Boasberg of the US District Court for Columbia said the trade group had failed to show that American carriers will suffer significant financial loss if the Boeing jets are delivered to Air India.

"Because plaintiffs have not demonstrated a likelihood that they will suffer irreparable harm during the pendency of the lawsuit in the absence of an injunction, the court will deny their requested relief," Boasberg ruled. The judge further noted that "none of the airlines participating in this lawsuit currently offers a direct flight between the US and India." Maintaining that only two planes were scheduled to be delivered to Air India by March, he pointed out that it was "wholly speculative" to assume that these deliveries would cause financial injury to US carriers.

"Any injury to plaintiffs that may be caused by the delivery of one or two planes to Air India is, at this stage, wholly speculative," Judge Boasberg said. Airlines for America, formerly known as the Air Transport Association of America, had filed the lawsuit in November on behalf of nine of its 14 members, including Delta Air Lines and Southwest Airlines. It had claimed that the Exim Bank`s practices would put US carriers at a commercial disadvantage to foreign carriers.

The US airline lobby group had earlier written a letter to US Export-Import Bank Chairman Fred Hochberg opposing the decision, saying Air India`s financial ill-health should disqualify it from getting American help. In its response, Exim Bank`s general counsel had then said the bank stood by its decisions and processes, though it would investigate some of ATA`s assertions about its procedures.

A US official had earlier said that Air India`s borrowing was backed by a sovereign guarantee of the Indian government and its business plan had been vetted by Exim Bank staff. Support to foreign buyers of Boeing planes was important since if the US planemaker could not sell airplanes to foreign buyers like Air India, its chief rival Europe`s Airbus probably would, the official had said. Air India has pending orders for 27 Boeing Dreamliners, the deliveries of which are expected to begin in the next few weeks. These are part of the 68 aircraft order placed by the national carrier with the US plane manufacturer.