US airlines seek to block Air India jet purchases

WASHINGTON: US airlines sought on Wednesday to block $3.4 billion in pending taxpayer-backed loan guarantees for Air India to buy Boeing Co jetliners.

The Air Transport Association, the leading US trade group for major carriers, sought an injunction in US District Court for the District of Columbia to stop financing arranged by the Export-Import Bank of the United States.

The Ex-Im bank is an independent agency that finances sales of American exports to international purchasers.

Airlines contend low-interest credit assistance to foreign carriers violates federal law. They also say that such financing puts them at a competitive disadvantage and that Air India's losses and management troubles should disqualify it from financing.

Air India ordered up to 50 long-range Boeing jets worth about $6 billion in 2005.

Foreign carriers, the US airlines also contend, have added capacity and gained market share on international routes to and from the United States.

"We believe that it is time for Ex-Im Bank to revise its practices and consider the impact on the US airline industry and its employees," said ATA Chief Executive Nick Calio.

"We repeatedly have sought additional information about the timing and details of the Air India delivery, but the Ex-Im Bank has refused to provide it. ATA has no choice but to seek judicial intervention in order to prevent our members from suffering irreparable injury," Calio said.

The Ex-Im Bank said it believes the ATA lawsuit is without merit.

"Export credit financing ensures American companies and American workers have a level playing field in the increasingly competitive and challenging global markets," Ex-Im Bank spokeswoman Maura Policelli said.

Boeing had no immediate comment.

The case is the Air Transport Association of America Inc v. Export-Import Bank of the United States.

Copyright Reuters, 2011