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After Airbus, Iran Edges Toward Historic Boeing Deal

After Airbus, Iran Edges  Toward Historic Boeing Deal
After Airbus, Iran Edges  Toward Historic Boeing Deal

Iran Air is discussing a historic aircraft purchase deal with Boeing, potentially matching an order for over 100 jets from Airbus, but obstacles to both deals need to be resolved so that last year’s accord to lift sanctions can be honored, the airline’s chairman said.

The Iranian flag carrier is in talks with Boeing about providing support for its aging fleet following the deal between Tehran and six major powers to ease economic sanctions in return for limits on Iran’s nuclear activities.

“Meetings and negotiations are going on. We hope that in future, we can reach an understanding with each other,” Iran Air Chairman Farhad Parvaresh told Reuters in an interview.

“The number and type of aircraft have to be discussed in the future, but the first step is to have a mutual understanding.”

Iran Air agreed in January to buy 118 jets worth $27 billion at list prices from Airbus. The deal was conditioned on US export licenses because of the quantity of US-built parts.

Asked whether Iran Air was looking at an even bigger deal with Boeing, Parvaresh said, “No, not bigger than Airbus; maybe close, but this also depends on the situation. Anyhow Iran is in need of at least 300 aircraft for the next decade.”

He said any such deal also depended “of course on our government as well, because we are a state-owned company”.

After decades of estrangement, Boeing officials have visited Iran to pitch their wares to Iran Air and some other carriers under a marketing license granted by the US government in February.

The US company would need another permit to strike a deal and then further export licenses, similar to those required by Airbus due to the use of US technology, to complete it.

Some industry sources expect a preliminary deal for at least 100 Boeing jets to be reached fairly soon.

“We’re following the licensing process outlined by the US government,” said Boeing Middle East spokesman, Fakher Daghestani.

Parvaresh said “a lot of issues” needed to be clarified in talks between Airbus and Washington over export licenses for European planes under last year’s nuclear deal, known as the Joint Comprehensive Plan of Action.

“We are very hopeful and optimistic that the licenses will be released in the near future. Based on the JCPOA, there should not be any big issues or excuses and they should clarify if there are any questions.”

Asked about the status of discussions with the US Treasury, Airbus spokesman, Justin Dubon, said, “We are making progress.”

  Finance Talks “Progressing”

Even with those licenses, Iran Air faces what aviation sources still regard as awkward hurdles in financing any deals.

The airline is talking to banks and leasing firms who could step in to take all or part of the Airbus deal, which must avoid the US financial system under remaining core sanctions.

“Our deal with Airbus is in euros. The financiers we are talking to ... are finding a solution to pay Airbus in euros and then we would have to pay the financiers. We are working on this,” Parvaresh said, adding these talks were “progressing”.

He said some banks were willing to get involved but lacked sufficient capacity to tackle the whole package.

“Everybody is willing to take 10 or so aircraft which is not in our interest. We would rather not have more than one or two (financiers) to make it easier, and we have had very fruitful discussions with some financiers who want to work with Iran and especially Iran Air.”

Financial sources say some Middle East and Chinese leasing companies appear willing to facilitate plane sales to Iran. But such deals would still need the backing of banks, many of which are still hesitant about doing business with Iran fearing possible US punitive measures.

US Secretary of State John Kerry said in April Washington was not against foreign banks doing business with Iran under the deal between Iran and six powers collectively known as P5+1.

Tehran, however, has complained about not getting the full economic benefits of the deal. Parvaresh said he hoped recent statements would reassure banks about doing business in aviation, which would send an important signal to other sectors.

“Some people are making propaganda that the JCPOA will not happen because the banking issues are not resolved. This is a responsibility of the P5+1 to resolve it as committed.”

Iran is dangling the prospect of significant business for western planemakers as it emerges from decades of sanctions.

“The country has a fleet of 250 aircraft, of which 90 are grounded due to the economy or missing parts,” Parvaresh said.

Financialtribune.com