Domestic Economy

EU Lifts Iran Air Ban After Boeing Deal

EU Lifts Iran Air Ban  After Boeing DealEU Lifts Iran Air Ban  After Boeing Deal

Iran Air, which has just reached an agreement with American plane-manufacturing giant Boeing to purchase new jetliners, can resume flights in the European Union, as the Iranian flag carrier has been removed from the EU safety blacklist, the European Commission said on Thursday.

Almost six years ago, the European Union sharply curtailed access to its airspace for Iran’s air fleet as a safety measure against the country's aging aircraft battered by years of sanctions.

With an average age of more than 26 years, the airline’s fleet is one of the world’s oldest, and European and American trade restrictions had prohibited the sale of spare parts needed to properly maintain the planes.

"I am happy to announce that we are now able to allow most aircraft from Iran Air back into European skies," EU Transport Commissioner Violeta Bulc was quoted by Reuters as saying, adding that Iran Air will now be allowed to fly all of its planes in the EU, except the Boeing 747-200, Boeing 747SP and Fokker 100 models.

The commission said the decision followed a visit to Iran by the EU executive in April. It also removed Indonesian budget carrier Lion Air, a major buyer of Airbus and Boeing jets, from its blacklist.

Tehran said on Tuesday that it had reached an agreement with Boeing for the supply of jetliners, reopening the country's skies to new US aircraft for the first time in decades.

Minister of Roads and Urban Development Abbas Akhoundi was quoted as saying by Mehr News Agency that details of the agreement will be announced “in the coming days”.

Boeing has been in talks with Iran for months to secure as lucrative a deal as the one its archrival Airbus clinched with the Islamic Republic back in January.

The agreement with the French planemaker is worth $27 billion and entails Iran buying 118 jetliners—45 single-aisle planes comprising 21 from the current generation of A320 family and 24 re-engined A320neos.

There are also 73 wide-body aircraft, including 27 A330s, 18 A330neos and 16 of Airbus’s latest A350s, plus 12 A380s.

Iran Air Chairman Farhad Parvaresh earlier told Reuters in an interview that a Boeing deal will not be bigger than Airbus; “maybe close, but this also depends on the situation”.

> Washington Post: $17b Deal for 100 jets

Following the Iranian minister's announcement, The Washington Post, however, reported that the deal will cover the purchase of 100 commercial passenger planes from Boeing, which would make the agreement the biggest sale of US goods to Iran since the easing of anti-Iran western sanctions over the country's nuclear program.

Although financing arrangements are not complete, the historic agreement is likely to cover deliveries and services over nearly a decade at a cost of more than $17 billion, the report added.

A Boeing executive said in an email reviewed by the Post that a deal would be finalized “shortly”.

“We do not discuss details of ongoing conversations we are having with customers, and our standard practice is to let customers announce any agreements that are reached,” the email reads.

The work by Boeing and Airbus to reestablish Iran’s jet market goes beyond aircraft sales.

"Pilots and mechanics will need to be trained on modern aircraft and commercial channels opened to finance them," said Howard Rubel, a managing director at Jefferies LLC.

Boeing isn’t “declaring victory”, he said. “They’re being very understated about it. Lots of things can still go awry. But it sounds like there’s been real progress.”

Boeing’s shares rose less than 1% to $130.39 at Tuesday 3:54 p.m. in New York, bucking declines across major indexes. The stock had declined 10% this year through Monday, while the S&P 500 Index gained 1.7%, Bloomberg reported.

For the first time after the 1979 Islamic Revolution, which marked the beginning of US sanctions on Iran’s aviation Industry, Boeing officials visited Iran in April to discuss supplies to flag carrier Iran Air and other Iranian airlines under a license granted by the US government in February.

The Boeing delegation discussed jetliner sales and maintenance services with seven Iranian airlines during their two-day Tehran visit.

“The company’s executives have offered new series of 737, 777 and 787 planes,” said Maqsoud As’adi Samani with the Association of Iranian Airlines.

There are roughly 280 planes flown by more than a dozen airlines in Iran. The Islamic Republic’s fleet comprises 60 Boeings, including 747s that predate the 1979 Islamic Revolution. Many of Iran’s Boeings are grounded because of mechanical issues.

According to Samani, 48 Boeings are in operation in Iran, including McDonnell Douglas, 747s, 737s, 727s and 757s, which account for 32% of the country's air fleet.

Akhoundi's deputy, Asghar Fakhrieh Kashan, said Iran is interested in Boeing 737s, one of the world’s most widely used jetliners.

The minister had said earlier Iran is hoping to become a major aviation hub in the Middle East, adding that the country’s fleet of passenger jets should include 400 mid-range and 100 short-range planes, requiring an investment of about $50 billion.