Domestic Economy

Airbus, Boeing Plan to Return to Iran Deals

Airbus, Boeing Plan to Return to Iran Deals
Airbus, Boeing Plan to Return to Iran Deals

Minister of Roads and Urban Development Mohammad Eslami says the international plane-manufacturing companies Airbus and Boeing intend to return to contracts they concluded with Iran several years ago.
“The plane-manufacturing companies are returning to implement the terms of the contracts,” Eslami was quoted as saying by Fars News Agency.
“It has been emphasized that the plane manufacturers should honor their obligations,” he added.
The minister had earlier said that all Iranian airlines are obliged to expand their fleet once the Joint Comprehensive Plan of Action is reinstated.
"Sanctions had caused [plane] manufacturers to withhold the sale of parts to Iranian airlines. At the same time, these conditions made it very difficult [for Iran] to buy airplanes," he was quoted as saying by IRNA.
Iran and the US are holding indirect negotiations on a return to compliance with the 2015 Iran nuclear deal. Talks are underway in Vienna, in which representatives of Britain, China, France, Germany, Russia and European Union are shuttling between US and Iranian delegations. 
JCPOA limited the scope of Iran's civilian nuclear program. In return, the Islamic Republic received relief from US and international sanctions. However, Washington walked out of the deal under the administration of former president, Donald Trump.
Eslami noted that the Ministry of Roads and Urban Development can provide loans from the National Development Fund to help airlines renew their aging fleet.
According to IRNA, the US Office of Foreign Assets Control is bound by JCPOA to issue a license for Iranian airlines to purchase aircraft and parts from foreign manufacturers.
The US Treasury Department’s regulations prohibits non-US persons from reexporting from a third country, directly or indirectly, any goods, technology, or services that have been exported from the United States, if the item is subject to US export licensing requirements. This prohibition applies to the reexportation by non-US persons of foreign-made items with 10% or more US-controlled content by value. Foreign-made aircraft, including old aircraft, may contain 10% or more US-controlled content by value.
After the 1975 Islamic Revolution, as a result of economic sanctions against Iran by the United States, Iranian airlines were unable to expand or replace its fleet.
The prolonged period of time of international sanctions and prohibition from purchasing spare parts and new planes led to a dramatic rise in its average fleet age and plunging safety record.
The imposition of international sanctions over Iran's nuclear program exacerbated the situation for the flag carrier Iranian airline.
However, the nuclear deal Iran signed with world powers in 2015, which led to the removal of international nuclear sanctions against Tehran, paved the way for airlines, especially the flag carrier IranAir to renew its aging fleet.
IranAir secured massive orders from giant plane manufacturers after the conclusion of the nuclear deal. Its orders included 100 Airbus, 80 Boeing and 20 ATR passenger planes, with an aggregate value of $20-30 billion.
Later, as the US reimposed unilateral sanctions against the Islamic Republic, the delivery process of the orders placed by IranAir came to a halt after the US Treasury Department revoked the licenses of Boeing and France’s Airbus to sell commercial planes to Iran Air.
Although Airbus is based in France, it must have the approval of the US Treasury’s Office of Foreign Assets Control to sell planes to Iran because at least 10% of the components of its aircraft are US-made. This is also the case with any other planemaker.
An Airbus A321, two Airbus A330s and 13 ATR 72-600 turboprops, five of which were delivered hours before the first reimposition of the first batch of sanctions in August have been delivered to Iran as part of the contracts. 
The rest of the orders were cancelled, as OFAC revoked previously issued licenses allowing the sales of brand-new airplanes to Iran. This is while selling airplanes to Iran was among the issues directly addressed in the nuclear agreement.
“IranAir sent a letter to Boeing in late 2020 asking the Chicago-based jet maker to clarify the status of the deal it signed with the Iranian carrier airline in 2016,” Aireza Barkhor, the CEO, said recently.  
“We reminded the aircraft maker of its commitments and the human rights issues the US always claims to advocate. It is the right of the Iranian people to experience safe aviation operations and have access to adequate and efficient aircraft spare parts according to the contract,” he was quoted as saying by IRNA. 
Echoing the same remarks, Eslami said: “Boeing must be accountable over its contract with Iran Air.”

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