World Economy

Boeing Loses Satellite Deal Due to Trade Credit Woes

Boeing Loses Satellite Deal Due to Trade Credit WoesBoeing Loses Satellite Deal Due to Trade Credit Woes

Boeing Co is scrambling to find alternate financing for a satellite contract worth “several hundred million dollars” that was scuttled by privately held commercial satellite provider ABS due to uncertainty about the future of the US Export-Import Bank, three sources familiar with the matter said on Tuesday.

ABS, based in Bermuda and Hong Kong, terminated its order for the satellite in mid-July, citing the expiration of the trade bank’s charter on June 30, according to the sources, who asked not to be named given the sensitivity of the issue, Reuters reported.

The termination marks the first known casualty of the ongoing congressional debate over the future of the trade bank, which lends money to US exporters and their foreign customers.

ABS told Boeing, the largest US exporter, that it would have to consider non-US-based producers to build ABS-8, given the absence of US export credit financing, the sources said.

Boeing first announced the ABS contract in June, saying the new satellite, scheduled for delivery in 2017, would expand broadcast and enterprise services to Australia, New Zealand, the Middle East, Russia, South Asia and Southeast Asia.

Boeing Chairman Jim McNerney, expressing frustration about the refusal of a small minority of lawmakers to accept majority support for the bank, last week said the company is now looking at moving some commercial work to other countries.

Tea Party conservatives in the US Congress have attacked the trade bank as a promoter of “crony capitalism” for multinationals such as Boeing and General Electric Co.

The bank’s backers argue that it actually provides revenues for the US government, and helps level the playing field for US exporters given similar trade credits available for other manufacturers around the world.

Boeing, which competes with Lockheed Martin Corp and privately held SpaceX in the commercial satellite market, said it might consider sites in countries that offer export credits, McNerney said.

He said the failure of congress to extend the bank’s charter as part of a short-term extension of highway funding, meant the bank’s fate would now remain uncertain through September or October. He said was more worried than ever that congress could ultimately fail to reauthorize the bank.

GE last week said it was also taking steps to shift some manufacturing work overseas now that the bank will be shuttered at least until September.