Big Two Opposed To "Favorable" Financing For Regional Jets

With the spectre of Bombardier CSeries jets eating into their market share, Airbus and Boeing are working together to oppose the Canadian government's proposal to finance the CSeries under rules that currently exist for smaller aircraft. Aviation industry financial leaders plan to meet next week to discuss export-financing rules at the Organization for Economic Cooperation and Development in Paris.

CSeries Artists Concept

The Wall Street Journal reports that the U.S. and European Union dispute Canada's claim that the CSeries jets can be financed through existing rules normally applied to smaller aircraft, but not to jets built by Boeing and Airbus. The C-Series is widely seen as a potential competitor to the Airbus A320 and Boeing 737 single-aisle airplanes.

The export rules covering regional jets guarantees that an export-credit agency will repay a loan for an airplane should the buyer default. Boeing and Airbus had no problems with different rules for regional jets than longer-haul aircraft because they did not see an overlap in the market. But they objected when the Canadian government wanted to use the same favorable rules for the CSeries, which will directly compete with their aircraft.

A U.S. Treasury spokeswoman said the goal of the OECD is to formulate a single set of rules for all aircraft. Aircraft makers from Russia, China, Japan, and Brazil are all also included in the talks, as each either has aircraft already in the 100+ seat category, or have plans for such airplanes. All could erode the 20-year, $6 trillion combined market currently anticipated by Airbus and Boeing.

FMI: www.oecd.org