Home Business Iran Insists That Boeing, Airbus Deals Will Go Ahead

Iran Insists That Boeing, Airbus Deals Will Go Ahead

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The Iran Civil Aviation Organization (ICAO) has insisted that recently announced deals with the world’s two big aircraft manufacturers, Boeing and Airbus, can still go ahead, despite strong opposition to the deals from some U.S. politicians.

Reza Jafarzadeh, a senior spokesman for the ICAO, has said that although no formal contracts have been signed all sides remain committed to the undertakings they have given, according to remarks reported by the official Islamic Republic News Agency. He added that the Ministry of Roads and Urban Development and the Foreign Ministry were together working on the issue.

Iranian airlines need to buy around 500 planes over the next ten years to replace their aging fleets and to take advantage of the expected growth in air travel in the coming years. Iranian carriers currently own a 250-strong fleet, but at least 100 of their planes have either broken down or been stripped for spare parts.

In January, Airbus agreed to sell 118 aircraft to Iran in a deal worth up to $27bn. That was followed in June by Boeing tentatively agreeing to sell 80 planes to Iran Air, in a deal worth $17.6bn at list prices.

Farhad Parvaresh, managing director of Iran Air, told the local Farsi news agency on July 17 that it hoped to finalise the deal with Airbus and another, smaller deal with France’s ATR by the end of August. The first planes could be delivered by the end of the year.

However, all of these deals could yet fail unless international banks agree to provide financing. To date, the major global banks have refused to deal with Iran because of fears of running afoul of U.S. sanctions on the country. Iran Air says it has lined up French and German banks to help finance the Airbus deal, although the identity of the banks has not yet been revealed.

Another issue which could yet scupper the deals is opposition from the U.S. Congress, with the House of Representatives recently passing a motion to block the U.S. government from granting licenses for the export or re-export of commercial passenger aircraft and parts to Iran.

If the deals are blocked, Iran will have to look for other options to revive its airline fleet. One possibility could be to lease planes from other sources, although that too would be likely to come under critical scrutiny from U.S. politicians. Sri Lanka’s national carrier, SriLankan Airlines, is reportedly interested in leasing one of its new Airbus A350 aircraft to Iran, as it looks to cut costs and trim its route network.

Failing that, smaller aircraft manufacturers may be easier to deal with than the giants of Boeing and Airbus. As well as ATR, Iran has also agreed to buy some jets from Brazil’s Embraer and has reportedly been in talks with Japan’s Mitsubishi and China’s Comac.

 

This article was written by Dominic Dudley from Forbes and was legally licensed through the NewsCred publisher network.

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