Iran’s Boeing deal hanging by a thread

Iran’s Boeing deal hanging by a thread
An IranAir Airbus A300 making a refuelling stopover at Milan-Malpensa airport. Iran’s aircraft fleet is crying out for an expansion and modernisation. / Stefano Ciccarelli, www.planespotters.net
By Will Conroy in Prague April 27, 2018

Boeing has announced that it has found new homes for jets it hoped to deliver to Iran this year. Its announcement came as French President Emmanuel Macron concluded his state visit to the US saying he feels Donald Trump is poised to pull Washington out of the multilateral nuclear deal with Tehran, a move that would rule out Boeing aircraft deliveries to the Islamic Republic and probably block the fulfilment of multi-billion-dollar orders placed by the Iranians with Airbus as well.

Chicago-based Boeing has stood on the sidelines watching the attempts of France, Germany and the UK to persuade Trump not to abandon the nuclear accord with Iran. It knows that only if the US president can be talked around does it stand a chance of completing its December 2016 deal to sell 80 aircraft to IranAir. And the prospects for that are not encouraging. Speaking to journalists in the US capital before departing for France, Macron said: “My view—I don’t know what your president will decide—is that he will get rid of this deal on his own for domestic reasons.”

Aerospace industry observers have been worried that if Trump does withdraw the US from the 2015 nuclear deal by his May 12 deadline for a renegotiation of the agreement—which lifted heavy economic sanctions against Iran in return for a major scaling down of the country’s nuclear development programme—Boeing might be forced to cut production of its $347mn 777 jetliner, threatening hundreds of jobs.

But news agencies reported Boeing chief executive Dennis Muilenburg as saying in an April 26 conference call: “We have no Iranian deliveries that are scheduled or part of the [production] skyline this year, so those have been deferred in line with the US government process.”

He added: “I can tell you with confidence that we have continued to build risk mitigation into our 777 production plan.”

The deal with IranAir includes 15 Boeing 777-300ER long-range jets for which Boeing has secured US export licences. If the Boeing and Airbus deals collapse it would be a heavy blow to Iran’s airline industry which suffers from dated and depleted fleets. A leaked report published by Iranian media in July last year outlined how 124 of the Islamic Republic's 298 airliners were grounded due to failures to source spare parts from abroad. It is well known that during the years of nuclear sanctions, when such sourcing was banned, Iran even resorted to smuggling in parts to keep aircraft airborne.

Industry sources told Reuters that Boeing had been tentatively due to send Iran three 777s this year but has reshuffled deliveries with other buyers.

Muilenburg also said: “The production rate that we have put in place is not dependent on the Iranian orders. If those orders do come to fruition, if we do ultimately deliver airplanes, those represent opportunities for us but we are going to follow the US government’s lead and we have ensured that... we are not dependent on those aircraft.”

Iranian officials have accused Washington of hindering the delivery of both American and European planes. The US can make the delivery of Airbus planes to Iran difficult by complicating their financing with its unilateral banking sanctions against Iran and hampering licensing. US licensing from the United States Office of Foreign Assets Control for Airbus jet deliveries to Iran is required because the aircraft use US components.

IranAir has ordered 100 Airbus jets and 20 Franco-Italian ATR turboprops, but it has only taken delivery of three Airbus and 8 ATR planes to date. The first Airbus plane, an Airbus A321, was handed over to IranAir at a ceremony in Toulouse, France on January 11 last year.

The US has to date issued licences that would allow about one-third of the Airbus deliveries to IranAir to go ahead. But if Trump pulls the US out of the nuclear deal, these could be impacted.

Another Iranian airline exposed to the collapse of the nuclear deal is semi-state owned Aseman Airlines. In June last year it finalised a deal with Boeing for 30 Boeing 737-Max jets in a deal worth $3bn at list prices.

Boeing and Airbus also inked preliminary contracts for aircraft deliveries with Iranian airlines at last year’s Paris Air Show.

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