ATLANTA ( TheStreet) -- In 2009, Delta (DAL) financed three 777s it bought from Boeing (BA), paying interest at 8.11% over nine and a half years. That same year, Emirates Airline bought three similar aircraft, paying interest at 3.4% over 11.9 years.
While the Emirates borrowing had a loan-to-value ratio of 50%, Delta's loan-to-value ratio was 40%. So Emirates' low-cost loan covered more of its purchase.
How can that be? The reason for the discrepancy is that Emirates and many other carriers can borrow at low cost for aircraft financing from the U.S. Export-Import Bank and similar agencies in Europe, Canada, Brazil and Japan, all aircraft exporters. But such financing is unavailable to U.S. and major European carriers.
"It's absurdly unfair to U.S. carriers that the U.S. government should be financing our foreign competitors with below market interest rates," said Ben Hirst, senior vice president and general counsel for Delta, in an interview. "It creates an unlevel playing field for U.S. airlines competing internationally, and it has led to
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