Appeals court allows loan guarantees for Indian airline

{mosads}“I am gratified by the court’s recognition that these transactions should not be impeded by litigation,” said Fred Hochberg, chairman and president of the bank, in a statement after the ruling was announced. “This represents a victory for tens of thousands of American aerospace workers.”

The government bank can provide loans and loan guarantees for foreign companies to purchase American goods and services, though it is required to take into account the impact that “foreign production of an exportable good” facilitated by the loans may have on American jobs and industries.

The sale of airplanes to Air India, though, would increase the company’s ability to offer services, not goods that it could export. As such, the bank did not take into consideration how its loan guarantees would affect American jobs or industries when it approved them in 2011.

Delta Airlines challenged the bank’s actions and asked the court to invalidate the loans. Delta argued that the Export-Import Bank Act mandates the bank perform the analysis for loans to goods and service providers alike.

While allowing the loans to stand, the court ruled that the Export-Import Bank needs to examine the effects they will have on U.S. workers.

In its decision, the court wrote “the Bank has not reasonably explained its apparent conclusion that loans and loan guarantees to help a foreign company provide a service (as opposed to a good) can never cause adverse effects to U.S. industries and U.S. jobs.”

In a statement, Delta said, “The Bank now will be required to take the complaints of industry participants seriously before proceeding with potentially harmful subsidies to foreign airlines.”