WASHINGTON (CN) - A federal judge approved Export-Import Bank of the United States' guarantee of Air India's $3.4 billion purchase of Boeing planes, dismissing the Air Transport Association of America's objections.
The Association sought an injunction last year to stop the deal, claiming that the bank violated the Export-Import Bank Act, the Bank Act and the Administrative Procedure Act by processing the loan-guarantee applications.
"In the end, [the court] finds that plaintiffs have established standing and that the bank's loan-guarantee determinations are, at least in a limited sense, subject to judicial review," U.S. District James Boasberg wrote. "But after winning these battles, plaintiffs lose the war. When all is said and done, the bank's decision to approve the Air India commitments was neither arbitrary and capricious nor contrary to law."
Loans and loan guarantees granted by the Export-Import Bank that support domestic aircraft manufacturing make up a substantial portion of the bank's transactions. The bank allows foreign airlines to obtain credit and lower interest rates, giving the incentive for the airlines to buy U.S. planes.
In 2011, the bank approved $3.4 billion to support Air India's purchase of a Boeing 787 aircraft and 777-300ER planes.
"The manufacturers appreciate the help in selling their planes to foreign buyers, but the airlines resent the boost this provides to their competitors," Boasberg wrote.
The Air Transport Association, which is made up of major airlines and carriers such as Continental, United, American and FedEx, unsuccessfully sued for an emergency injunction last year. They failed to demonstrate how the airlines would be injured by the deal, and although the judge granted the airlines standing to sue, he ultimately dismissed the complaint.
"In the final analysis, although plaintiffs mount significant and probing challenges to the bank's procedures both generally and in specific relation to these Air India commitments, the court does not believe the unprecedented step of invalidating those procedures or their application to the Air India transactions is warranted here," Boasberg wrote. "It is not for the court to determine the advisability of these commitments or to enter the lists on behalf of either domestic airplane manufacturers or domestic airlines. The court's sole role is to determine whether the bank has acted arbitrarily, capriciously, or in violation of the law. In this case, it cannot so find."
The Export-Import Bank of the United States is an independent federal agency and corporation established under the Franklin Roosevelt administration. The Import-Export Bank Act was established to facilitate exporting and importing of goods and commodities.