UPDATE 2-U.S. court lets stand Ex-Im Bank loan for Air India

Last Updated: Tue, Jun 18, 2013 21:00 hrs

WASHINGTON, June 18 (Reuters) - A U.S. appeals court on Tuesday let stand a 2011 decision by the U.S. Export-Import Bank to finance the sale of 30 Boeing wide-body jets to Air India in a legal challenge brought by Delta Air Lines.

However, the court directed the government-run bank to better explain its rationale for the loans.

The ruling allowed both the bank and Delta, which has been engaged in a long-running spat with the Ex-Im Bank, to claim victory.

"I am gratified by the court's recognition that these transactions should not be impeded by litigation," Fred Hochberg, chairman and president of the Ex-Im Bank, said in a statement after the ruling.

Delta said in a statement: "The bank now will be required to take the complaints of industry participants seriously before proceeding with potentially harmful subsidies to foreign airlines."

Altanta-based Delta, which is expecting its most profitable year ever in 2013, claims it is hurt by Ex-Im Bank programs that allow foreign carriers to buy Boeing jets on easier credit terms than it can get.

In its suit, it claimed that Ex-Im had failed to consider the economic impact of its loan guarantees. The airline initially sought to stop $3.4 billion in preliminary and final Ex-Im Bank loan guarantees to help India acquire the aircraft.

The appeals court said it was directing the Ex-Im Bank to better explain its decision for the loans "without vacating any of the bank's actions in this matter to date."

But it added: "The bank's actions on remand of course will be subject to later judicial review if an aggrieved party wishes to challenge the bank's actions as unlawful."

The main U.S. airline industry group, Airlines for America, applauded the appeals court decision, which it said "recognizes that the U.S. Export-Import Bank ... must consider the impact of loan guarantees on U.S. industries and U.S. jobs."

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