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US Planemakers Join Bidders for Iran Market

US Planemakers Join Bidders for Iran Market US Planemakers Join Bidders for Iran Market

US President Barack Obama took another step toward implementing the Iran nuclear deal on Friday, by ordering that a decade-long ban on sales of civilian aircraft to Iran be lifted.

The American daily USA Today wrote in its website that the move comes as the United Nations nuclear watchdog was expected to confirm on Saturday that Iran has lived up to its promise to limit its nuclear program, which would in turn lead to the lifting of sanctions.

This is part of the deal reached between Tehran and P5+1 group of countries (the US, the UK, France, Russia, China and Germany) on July 14, 2015.

The largest US planemaker Boeing, along with other western manufacturers, had been prohibited from doing any dealings with Iran as of the 1979 Islamic Revolution until November 2013, when an interim nuclear deal was reached between Iran and world powers.

On October 2014, Boeing confirmed it had sold aircraft-related goods to Iran Air. The Chicago-based Aerospace and Defense Company said in a public filing that it sold aircraft manuals, drawings, navigation charts and data to Iran Air to help improve the safety of Iran’s civil aviation industry.

However, sales of aircraft remained banned until recently.

Boeing and General Electric earlier said they had received export licenses from the US Office of Foreign Assets Control allowing them to sell parts for commercial aircraft to Iran under temporary sanctions relief.

Iran’s fleet of 25 years in age, however, needs more than navigation charts to renovate its dilapidated infrastructure. According to Iran Civil Aviation Organization, Iran needs 400-500 civil planes in the next 10 years to refurbish its fleet.

CAO’s deputy chief, Mohammad Khodakarami, has said the government held talks with international planemakers for the purchase of 10 passenger planes as soon as the sanctions are lifted, noting that the new planes will join the Iranian fleet by the end of the current Iranian year (March 19, 2016).

Ever since the landmark nuclear deal, Boeing’s name has been mentioned by experts many times alongside French giant Airbus as the best options for the modernization of Iran’s fleet.

Khodakarami earlier said Iran would buy a total of 80-90 planes per year from the two planemakers in the first phase of renovating its air fleet.

Iranian President Hassan Rouhani in mid-November said Iran will probably sign a deal to buy Airbus aircraft during his France visit, which was postponed due to deadly terrorist attacks in Paris.

“We already use Airbus or Boeing planes today. Usually when conditions are right, our buyers will buy from one or the other, and probably it will be Airbus,” he said.

Meanwhile, Iranian airlines might consider other alternatives as well, such as the world’s third manufacturer, Brazilian Embraer, and Russia’s Sukhoi Super Jet 100, which happen to be more affordable.

After a boom in airplane demand, the major western manufacturers are sold out for most of the rest of the decade.

“There is not much choice because of the way production lines are sold out,” said Tony Whitty, CEO of UK-based aircraft trading company Cabot Aviation. “In the short term, if you go to Airbus and Boeing, you have got to wait three or four years.”

Moreover, amid chronic financial woes facing Iranian airlines, as a result of years of sanctions, they are also opting for leasing or buying secondhand aircraft to meet their short-term needs.

Obama’s green light to Boeing for doing business with Iran comes at a time when world commentators as well as US-based analysts voice concern that American companies are losing big in the competition to enter the reemerging Iranian market.

Boeing is one of many US companies, including Apple, US automakers, engine manufacturer General Electric and the country's oil companies, waiting for the US unilateral sanctions against Iran to be lifted so that they could benefit from Iran’s opportunities.

 

Financialtribune.com