Airbus, Boeing Seal Deals with Iran for Sale of 180 Aircraft
“I am delighted that we have reached an agreement to go to the next
decisive phase and start taking delivery of new aircraft,” Farhad
Parvaresh, Iran Air Chairman said.
Europe’s Airbus signed a firm contract on December 22 to sell 100 jets to
Iran Air, completing a return by Western plane giants and paving the way for
deliveries to start in January, a year after sanctions against Iran were
The deal took weeks of shuttling between Airbus headquarters in Toulouse,
France, and Tehran, complicated by a shortage of expert legal advice as Iran
completes its biggest commercial deals with the West since its 1979 Islamic
The agreement signed by Farhad Parvaresh, Iran Air Chairman and CEO and
Fabrice Bregier, Airbus President and CEO, covers 46 A320 Family, 38 A330
Family and 16 A350 XWB aircraft. Deliveries will begin in early 2017.
“I am delighted that we have reached an agreement to go to the next decisive
phase and start taking delivery of new aircraft. I am gratified that this
new round of cooperation with Airbus has come to fruition and brought us
closer with more practical steps to follow for Iran Air’s fleet renewal.
Iran Air considers this agreement an important step towards a stronger
international presence in civil aviation. We hope this success signals to
the world that the commercial goals of Iran and its counterparts are better
achieved with international cooperation and collaboration,” said Parvaresh.
“This is a landmark agreement not only because it paves the way for Iran
Air’s fleet renewal”, said Bregier. “Our overall accord includes pilot
training, airport operations and air traffic management so this agreement is
also a significant first step in the overall modernization of Iran’s
commercial aviation sector”.
The agreement is subject to US government Office of Foreign Assets Control (OFAC)
export licenses which were granted in September and November 2016. These
licenses are required for products containing 10 per cent or more US
technology content. Airbus coordinated closely with regulators in the EU, US
and elsewhere to ensure understanding and full compliance with the Joint
Comprehensive Plan of Action (JCPOA). Airbus will continue to act in full
compliance with the conditions of the OFAC licenses, according to a press
release posted on Airbus Company website.
The agreement follows the implementation of the JCPOA, its associated rules
and guidance and included new commercial aircraft orders as well as a
comprehensive civil aviation package. The package includes pilot and
maintenance training, supporting the development of air navigation services
(ATM), airport and aircraft operations and regulatory harmonization.
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 in the Middle
East. In addition, Airbus provides the highest standard of customer support
and training through an expanding international network.
Airbus said almost half the jets would be for short to medium routes and
that deliveries would start early next year.
Such a deal would worth $18-20 billion at list prices, depending on variants
flown, but Iran is expected to receive steep discounts from foreign
manufacturers as its aviation renewal coincides with a drop in demand
The Iran Air chief was quoted earlier as saying the value of the contract
would not exceed $10 billion.
It is expected to be followed by a formal deal to buy turboprop aircraft
from ATR, half-owned by Airbus.
The breakthrough comes days after Iran signed a $17 billion deal with Boeing
for 80 jets and is expected to sharpen efforts by the U.S. company to
persuade the incoming U.S. administration to allow the trade to go ahead,
aviation experts said.
The first jet, an Airbus A321 already painted in Iran Air livery, may arrive
before the Jan. 20 inauguration of President-elect Donald Trump, who has
opposed an international deal to lift sanctions in return for curbs on
Iran’s nuclear activities.
“When Airbus and ATR aircraft start going into Iran, Boeing will point to
that to argue that it should implement its own deal,” said an aviation
source who closely followed the talks.
“Today is a historic day. . . that after 41 years, Iran Air and Boeing ink
this deal,” said Abbas Akhoundi, Iran’s Minister of Roads and Urban
Development at the ceremony. “It has a clear message for the world. . . by
which businessmen are telling the world that they support peace, calm and
development of humanitarian affairs.”
The Boeing sale includes 50 737 MAX 8s, 15 777-300ERs and 15 777-9s, the
largest of its newest long-haul jet. The aircraft will be delivered over the
next decade with the first arriving in 2018.
The deal will be a welcome boost to Boeing’s efforts to bridge the
transition from its current generation 777 wide-bodies to the new re-engined
777X version. It also gives Boeing’s new generation 737 MAX a welcome boost
in the face of fierce competition from Airbus’ A320 narrow-body family,
which has been taking the majority of single-aisle orders.
However, Iran Air is equally buying a mix of new and current generation
aircraft from Airbus in two stages — both of which have been granted
approval by US authorities.
Boeing said it “coordinated closely with the US government throughout the
process leading up to the sale and continues to follow all license
requirements as it moves forward to implement the sales agreement”.
Iran has said it needs 500 new aircraft to renew the country’s ageing fleet,
which includes some of the oldest models still in operation globally. Iran
has said that only 12 passenger aircraft out of 250 were less than 15 years
Despite rivalries, the Airbus and Boeing deals with Iran are unusually
intertwined because each depends on continued U.S. clearances for the sale
of planes built with U.S. parts.
“Everyone has an interest in moving quickly. The Iranian government wants to
show results from the nuclear deal; Airbus wants to get deliveries moving
and Boeing wants the leverage it can get from European deliveries to Iran,”
another source said.
Republican critics of the nuclear pact want Trump to block the aircraft
deals and have sought to hamper them by voting to tighten restrictions on
use of the U.S. financial system.
Airbus is expected to be paid in euros instead of the usual dollars and is
likely to provide its own financing for the first few jets, adding to cash
strains caused by a spike in customer financing for Turkey this year.
However, both sides confirmed the Airbus A380 had been jettisoned from a
provisional list first agreed in January.
Reuters first reported in June that the original proposal for 12 A380s -
seen as a symbol of Iran’s determination to catch up with Persian Gulf
rivals and a shot in the arm for Airbus as it struggled to sell the world’s
largest airliner - was threatened by domestic opposition in Iran.
U.S. regulatory delays further reduced the order by six planes, lowering the
total order to 100 from 118 jets.
Test for Trump, Rouhani
Financial sources said Boeing has a financing plan for 15 777-300ER jets,
which are expected to be delivered from 2018, but the rest of the financing
may still have to be negotiated.
The deal could also test relations between America’s top exporter and U.S.
President-elect Donald Trump, days after he complained about the cost of new
Boeing “Air Force One” jets.
Because of the length of the 10-year deal, some U.S. export licenses may
need to be extended during Trump’s administration. The president-elect, who
opposes last year’s nuclear sanctions deal with Iran, has also rattled
Boeing by sparring with China, which accounts for a fifth of the company’s
A Boeing statement said the Iranian contract would support tens of thousands
of U.S. jobs for the 777-300ER jets and nearly 100,000 U.S. aerospace jobs
for the whole package.
The acquisition of modern planes is an important achievement for President
Hassan Rouhani, who pledged when elected three years ago that he would
negotiate a nuclear deal to help alleviate the economic privation caused by
Proponents of the agreements with Boeing and Airbus hope that Trump will
judge the deals by the gains they provide for employment and exports.
Observers say when Boeing and Airbus come forward with these massive deals,
with these jobs, it will have an impact on the U.S. economy.
In Iran the deal is also viewed as a crucial political test for the
government of pragmatist president, who has been criticized by hardliners
opposed to opening up to the West.
The first Airbus aircraft are expected to reach Iran in 2017. Iran’s
presidential elections are due in May.