The Export-Import Bank of the United States has agreed to guarantee two financing agreements that will provide $ 125 million to support the aerospace work of GE Aviation and Spirit AeroSystems.
One of the deals aims to inject liquidity into the struggling US aerospace supply chain, while the other will help Australian airline Qantas buy seven GE engines, the bank said.
The guarantees will “support” some 500 jobs in the United States and help the “hard-hit aviation” sector amid the Covid-19 pandemic and associated government travel restrictions, Ex-Im said. These factors, he adds, have restricted the availability of loans through private lenders.
Specifically, Ex-Im’s board of directors has agreed to back 90% of Bank of America’s $ 40 million in funding to suppliers to Wichita-based Spirit AeroSystems. The funds will also benefit Spirit’s affiliate in Kinston, North Carolina. Spirit manufactures fuselage components for a wide variety of manufacturers, including Airbus and Boeing.
The deal will allow Spirit to “pay its US-based suppliers,” by supporting 40 companies based in California, Florida, Iowa, Kansas, Montana, Oklahoma, Texas and Washington, said Ex- Im.
The guarantee comes from Ex-Im’s “Supply Chain Finance Guarantee” program, whereby suppliers “sell their accounts receivable to a private sector lender at a reduced rate to get their invoices prepaid”.
“It is designed to increase liquidity in the supply chain,” says Ex-Im.
The bank has also guaranteed an $ 85 million loan from JP Morgan to Australian airline Qantas, which is to use the funds to purchase seven spare GE Aviation engines for use on Qantas aircraft.
Ex-Im doesn’t say what types of engines Qantas will buy, but the airline’s fleet includes Airbus A330s powered by GE CF6 engines and Boeing 787s powered by GEnx power plants, according to data from Cirium fleets.
The $ 85 million funding will support some 400 jobs at GE’s “manufacturing and assembly sites” and GE suppliers, according to Ex-Im.