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Aircraft Parts, aviation, Export, Manufacturing, PMA

Ex-Im Bank Offers Better Support of PMA Parts on Airbus Aircraft

The Export-Import Bank of the United States announced a new policy that permits the bank to support the export of PMA parts intended for use on Airbus aircraft.

The policy was announced in a press release last week but the new policy was just formally posted on Ex-Im’s website, today.

Historically, the Export-Import Bank has been unable to provide official export credit support for U.S. goods and services exports that were intended for use in the production, or operation, of Airbus aircraft. This restriction was instituted in 1972 when the U.S. and Europe were the only two markets with manufacturers of commercially viable large aircraft in the world. The restriction applied to items sold both to aircraft manufacturers (like Airbus) and to end-users (like non-US airlines) that intended to use the U.S. exports on Airbus aircraft (e.g., aftermarket purchases).

The Ex-Im Bank decided to change this policy because of their recognition that the landscape for large aircraft manufacturers is rapidly changing.  New manufacturers are entering the market for large commercial aircraft (like Bombardier in Canada and COMAC in China).  These aircraft will compete directly with Boeing and Airbus aircraft. They will provide new opportunities for U.S. manufacturers, including PMA manufacturers.

Ex-Im is particularly interested in supporting small business manufacturers, which is why they are so eager to open their services to more PMA manufacturers.

In response to requests made by US exporters, and in an effort to expand U.S. export opportunities, on May 25th Ex-Im Bank announced an expansion of its aviation-industry export policy..  When we spoke to Ex-Im representatives, they admitted that there was no formal exposition of the policy at that time (other than the press release).  This morning, the new policy was published on the Ex-Im website and we confirmed by phone that this is the only formal exposition of the new policy.

The new “A-B-C large aircraft policy” permits Ex-Im to:

  • Finance the export of U.S. produced goods and services for aftermarket (post-manufacturing) use on foreign-manufactured large aircraft for U.S. exporters of all sizes (all PMA companies can use this provision); and
  • Finance the export of U.S. produced goods and services directly to large aircraft manufacturers (i.e., Airbus, Boeing, COMAC) if the U.S. exporter is an SBA defined small business (so small business can use Ex-Im to support their supply opportunities to foreign PC holders, regardless of whether they hold PMA).

Ex-Im will not finance exports of U.S. produced goods and services directly to foreign large aircraft manufacturers if the U.S. exporter is not an SBA defined small business.  Ex-Im notes that this policy currently applies to Airbus, Bombardier’s C-Series, and COMAC’s C919 aircraft.

Most PMA parts manufacturers fall into a 2007 NAICS code of 336412 or 336413, which means that they are SBA-defined small businesses if they have 1000 or fewer employees.

Valuable services offered by the Ex-Im Bank include (this is just a sample):

  • Credit Insurance, which covers losses resulting from nonpayment by a single buyer for such reasons as a buyer’s insolvency or failure to pay an obligation;
  • Small Business Multi-Buyer Credit Insurance, which insures all shipments on credit terms to all eligible countries during the policy period; and
  • Working capital guarantees, which encourage commercial lenders to make working capital loans by providing them with a 90% loan backing guarantee, which decreases their risk, permitting them to offer more competitive interest rates.

About Jason Dickstein

Mr. Dickstein is the President of the Washington Aviation Group, a Washington, DC-based aviation law firm. He represents several aviation trade associations, including the Aviation Suppliers Association, the Aircraft Electronics Association, the Aircraft Fleet Recycling Association and the Modification and Replacement Parts Association.


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