The Forum for Partners in Iran's Marketplace

September 2017, No. 85


More Iranian Airliners Initial Deals with Boeing, Airbus

Airbus said it would continue to act in full compliance with the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action, and associated rules.

Iran’s Qeshm Air has unveiled a preliminary agreement with Boeing to buy 10 B737Max passenger jets.

The airline’s CEO Mahmoud Shekarabi said (June 22) that the agreement was signed recently in Tehran following talks at IATA’s 73rd Annual General Meeting held in Cancun, Mexico, on June 4-6.

“During this event we had the opportunity to meet with top executives of prominent global plane manufacturing companies, including Boeing, Airbus and a few others,” he was quoted by the Iranian media as saying.

“Boeing expressed readiness to sell planes to Qeshm Air, and in follow-up meetings in Tehran… we reached a good deal,” he added.

Shekarabi said Boeing has committed to receiving all the required permits for the order, including those from the US Treasury Department’s Office of Foreign Assets Control (OFAC), adding deliveries would start as of 2022.

The contract will be in the form of finance and the order is expected to be finalized by early August, according to the chief executive, who added that Qeshm Air is also planning to buy five second-hand Boeing 737-800 aircraft.

The airline’s announcement came after Iran’s Zagros Airlines and Iran Airtour signed memoranda of understanding with Boeing’s European rival Airbus to purchase a total of 73 A320neo and A330neo aircraft.

Two Iranian Airlines to Buy 73 Airbus Jets

Airbus said (June 22) two Iranian airlines had committed to buying 73 planes in a last-minute flurry of deals for the European plane maker at the Paris Airshow.

Iranian domestic carrier Zagros Airlines signed a memorandum of understanding (MoU) to buy 20 Airbus A320neo jets and eight A330neo aircraft, while privatized Iran Airtour signed a MoU for 45 A320neos.

Iran has ordered more than 200 planes since international sanctions against the country were lifted last year in return for curbs on the country’s nuclear activities.

Iran Air has ordered 100 planes from Airbus, 80 from US rival Boeing and 20 ATR turboprops but implementing the deals has been hampered by uncertainty over financing.

Boeing has also signed a deal for 30 737 MAX jets with Iran’s Aseman Airlines, which is managed as a private company and owned by Iran’s Civil Servants Pension Organization.

Iran Airtour was established as a subsidiary of Iran Air and privatized in 2011 but maintains a status as subsidiary of the national flag carrier.

Zagros Airlines is a private carrier.

Airbus Chief Operating Officer and plane making president, Fabrice Bregier said he did not believe the deals were related to political issues.

The company said the MoUs were contingent upon all necessary approvals, including from the US Treasury’s Office of Foreign Assets Control. Airbus sales chief John Leahy said he expected the US approvals within the next couple of months.

Airbus said it would continue to act in full compliance with the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action, and associated rules.

Iran Airtour Commits to 45 A320neo Aircraft

Tehran based Iran Airtour Airlines, has become Airbus’ newest customer for the A320neo Family after signing a memorandum of understanding (MoU) for 45 aircraft at the Paris Air Show (June 2017).

Celebrating 45 years since establishment, the carrier now has been added to Airbus’ list of new customers. Operating scheduled services to domestic and international markets, Iran Airtour will benefit from the new aircraft to modernize its fleet and expand its operations to domestic and international markets.

“The A320neo Family with its unique features enabling operational efficiency and reliability will contribute to our growth and expansion strategy,” said Majid Shekari, Chairman of Iran Airtour Airlines. “Our success as a domestic and regional airline will be reinforced by this investment in the world’s leading single-aisle aircraft”.  

“This commitment for 45 A320neo Family aircraft demonstrates the confidence airlines have in our successful market leading single-aisle for its operational efficiency and unrivaled passenger comfort,” said Fabrice Brégier, Airbus COO and President Commercial Aircraft. “We are delighted to add Iran Airtour as a new Airbus customer and we look forward to our long-term partnership”.

The A320 Family is the world’s best-selling single aisle product line. To date, it has won over 13,000 orders and more than 7,600 aircraft have been delivered to some 400 customers and operators worldwide. With one aircraft in four sizes (A318, A319, A320 and A321), the A320 Family seats from 100 to 240 passengers. The Family features the widest cabin in the single aisle market with 18” wide seats in Economy as standard.

Zagros Airlines Places a Commitment for 28 New Airbus Aircraft

Zagros Airlines, one of the leading domestic airlines in Iran, has signed a memorandum of understanding with Airbus for the acquisition of 28 new aircraft, covering 20 A320neo and 8 A330neo aircraft.

The commitment was signed (June 22) at the 52nd Le Bourget Paris airshow by Seyed Abdolreza Mousavi, Zagros Airlines CEO and Airbus’ Brégier.

To date, Zagros Airlines is the largest domestic single-aisle Airbus operator in Iran with 11 A320ceo Family aircraft.

“We are delighted to have been able to reach an agreement with Airbus for these new aircraft. We have been a loyal operator of the A320 Family and the performance, operational and cost efficiencies of Airbus aircraft was the selling point for us to order these aircraft”, said Mousavi. “This represents a practical step for Zagros Airlines’ fleet renewal as well as expanding our operations both domestically and internationally.”

Brégier said: “We thank Zagros Airlines for their trust in our most efficient single and twin-aisle product families. They will allow Zagros to modernize and expand its fleet with minimum change benefiting from our fleet commonality which is unique to Airbus.”

As the world’s leading aircraft manufacturer, Airbus offers the most comprehensive range of passenger airliners from 100 to more than 600 seats. Airbus has design and manufacturing facilities in France, Germany, the UK, and Spain, and subsidiaries in the US, China, India, Japan and the Middle East. In addition, Airbus provides the highest standard of customer support and training through an expanding international network.

Challenge to Trump

The New York Times described the plane deals as a signal that the global aerospace industry is betting such sales to Iran will prevail despite increased hostility by the Trump administration.

The prospective deals, described by Airbus as memorandums of understanding, are worth as much as $2.5 billion and were announced by the company at the Paris Air Show, an important sales event for plane manufacturers.

The paper said if completed, the deals would further solidify Iran as a significant customer in the industry, dominated by Boeing in the United States and Airbus in Europe. Desperate to rejuvenate an aging civilian fleet hurt by years of sanctions, the Iranian air carrier, Iran Air, has made arrangements over the past year to buy up to 140 planes from Boeing and 100 from Airbus.

The deals are permitted under the 2015 nuclear agreement Iran reached with six major powers, which relaxed sanctions in return for Iran’s verifiable pledges of peaceful nuclear work. But the deals — even for the Airbuses — still must be licensed by the United States government because many components and technology in the aircraft are made in the US and are subject to export control regulations.

“While President Trump has railed against the nuclear accord with Iran, a country he has described as a pariah state that exports terrorism, his administration has grudgingly gone along with the agreement,” said the paper. He also has made no known moves so far to substantively change export licensing policies.

The aircraft deals in particular have presented a challenge to Trump because they could support thousands of manufacturing jobs in the United States, a major theme of his presidential campaign. At the same time, critics of Iran in the United States have urged him to stop those deals.

Richard Aboulafia, vice president of analysis at Teal Group Corp., an aviation consultancy, said the willingness of Airbus and Boeing to engage with Iran “reflects a belief that Trump will need to choose between jobs and foreign policy considerations, and he hasn’t proven particularly able to roll back international trade agreements.”

Farhad R. Alavi, managing partner at Akrivis Law Group, a Washington-based firm that specializes in sanctions and export laws, said the aircraft deals had placed Trump in a conundrum.

“The civilian aircraft industry is one of a shrinking number of major manufacturing sectors where we maintain a very clear competitive advantage,” Alavi said. “A hard line saying ‘no’ to such major aircraft deals at a time when demand has dwindled elsewhere does not inspire confidence in this president being committed to quality American jobs, particularly in the manufacturing sector.”

The effect of these orders on American aerospace jobs is unclear, partly because it depends on the avionics and engines selected by the customer. But Justin Dubon, an Airbus spokesman, said the A320’s engines would be made at least partly in the United States.

To Iran’s detractors, announcements of the additional Airbus deals amounted to a new reason to put pressure on Mr. Trump to block them, commented the NYT report.


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  September 2017
No. 85