Lost amid Eric Cantor’s surprising defeat at the hands of an underfunded Tea-Party challenger is the impact it could have on Boeing (BA). Guggenheim’s Chris Krueger explains why:
Getty Images Rep. Eric Cantor (R., Va.) In the short term, we believe that [the] reaction [to Cantor's loss] will manifest itself in a fight over the Export-Import Bank Reauthorization. Conservatives have been brewing for a fight over the relatively sleepy agency, which Cantor championed two years ago over their objections. The Export-Import Bank (Ex-Im) that facilitates exports by Boeing and many other firms is running out of statutory authority (September 30) as many House conservatives are eager to either shut down the bank or pass such stringent reforms that would put it on a trajectory for extinction. The Bank is funded by receipts collected from its customers, but Congress sets a limit on total financing activity (loans, guarantees and insurance) and on the duration of the Bank's charter (statutory authority). If Congress does not reauthorize the Bank by September 30, the Bank will shut down, much like the October 2013 government shutdown. Delta Air Lines (DAL) is leading the fight for substantial reforms to the agency, arguing that Ex-Im essentially subsidizes Boeing aircraft purchases from its foreign competitors (airlines such as Air India, Emirates, and Korean Air). The Cantor loss and leadership elections will shape the future of the House GOP and the summer fight over Ex-Im is likely to provide a forum for House conservatives to try and out-conservative one another by showing the tea party activists that they have not "gone Cantor.
Delta Air Lines would seem to have bigger issues to worry about today. While shares of Boeing have dropped 1.6% to $131.97, those of Delta Airlines have slid 6.1% to $38.23.
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