Update - Air Transport Association Action Against Ex-Im Bank

As previously reported in November 2011, the Air Transport Association of America, Inc. (the "ATA"), the principal trade association representing U.S. airlines, filed a complaint against the Export-Import Bank of the United States ("Ex-Im Bank") and several of Ex-Im Bank's senior officers alleging that Ex-Im Bank's recent approval of $1.3 billion in loan guarantees and $2.1 billion in preliminary commitments to Air India violated certain provisions of the Export-Import Bank Act of 1945 and the Administrative Procedure Act.

On January 16, 2011, Judge James Boasberg of the U.S. District Court for the District of Columbia denied a motion for preliminary injunction filed by the ATA in connection with the suit. The ATA's motion alleged that allowing the Air India financing to move forward during the ongoing litigation would cause irreparable harm to U.S. airlines, specifically noting that one aircraft was scheduled for delivery during the month of January, and another during the month of March.

In denying the motion, Judge Boasberg wrote that one of the criteria the ATA must establish is that its member airlines participating in the litigation will "suffer irreparable harm in the absence of preliminary relief." Noting that none of those participating in the litigation offer direct service to India, Judge Boasberg opined that "any injury to Plaintiffs that may be caused by the delivery of one or two planes to Air India is, at this stage, wholly speculative."

The judge also rejected the ATA's further argument that any newly acquired aircraft put into international service by Air India would have an adverse effect on U.S. carriers' ability to maintain their own international routes. Citing figures provided by Delta, a carrier participating in the litigation, Judge Boasberg noted that Delta's annual revenue on international routes where it competes with Ex-Im backed carriers accounts for less than 7% of the airline's total revenue, a figure that, were it to be adversely affected by the new deliveries at all, "hardly seems ruinous."

Ex-Im Bank spokesman Phil Cogan commented, "Today's ruling ensures that America's exporters will remain competitive and have a level playing field in the global marketplace".

The parties were scheduled to meet with Judge Boasberg during the month of January to discuss the next steps of the litigation.

ATA Members United Continental, American, Atlas Air, Federal Express and United Parcel Service did not join the suit.

DEAL...