Domestic Economy

Iran, Japanese Planemaker in Talks for Major Deal

Iran, Japanese Planemaker in Talks for Major DealIran, Japanese Planemaker in Talks for Major Deal

Mitsubishi Aircraft Corporation is in talks with Iran to supply the country with its regional passenger jet currently under development.

The Japanese company, which is a unit of Mitsubishi Heavy Industries, began market surveys into Iran last September, four months before the lifting of western sanctions against Iran over its nuclear program.

The planemaker has been touching base with flag carrier Iran Air and Iran Aseman Airlines, as well as the country's aviation authorities.

The company and the Iranian carriers are discussing purchase orders during the Farnborough Air Show, which kicked off on Monday in the London suburb, English-language business journal Nikkei Asian Review, a publication of the world's largest financial newspaper, the Tokyo-based The Nikkei reported on its website on Tuesday.

Iran Air is weighing the purchase of 80 70-seat Mitsubishi Regional Jets for domestic routes. Executives from both sides also discussed a possible deal last month during the International Air Transport Association Conference in Dublin.

Mitsubishi Aircraft is partnering with the Japanese government in this endeavor, aiming to make use of state-backed financing. Since it is developing the 90-seat model first, the company plans to deliver the 70-seater in 2019 at the earliest.

The Mitsubishi Regional Jet, or MRJ for short, is a twin-engine regional jet aircraft manufactured in a partnership between majority owner Mitsubishi Heavy Industries and Toyota Motor Corporation with design assistance from Toyota affiliate Fuji Heavy Industries, already a manufacturer of aircraft.

It will be the first airliner designed and produced in Japan since the NAMC YS-11 of the 1960s, which was produced at a loss. Its first flight was in November 2015, with deliveries scheduled for 2018 (for the 90-seat model).

Rivals Embraer of Brazil and Canada's Bombardier are also marketing their aircraft in Iran. Europe's Airbus has reached agreement with Iran for the purchase of 118 planes. US-based Boeing announced a deal with Iran Air in late June.

Because of economic sanctions, Iran had been unable to replace aging aircraft. The government said it needs between 400 and 500 passenger planes over the next decade.

Airlines based in Qatar and Dubai had monopolized that demand up to now. Tehran is also planning to expand its airports and transform the city into a Middle East hub.

However, several American legislators maintain a hard line against selling commercial aircraft to Iran. Both Airbus and Mitsubishi Aircraft procure many parts from the US.

Meanwhile, Mitsubishi Aircraft announced it has entered into a letter of intent with Rockton, a Swedish regional aircraft leasing company, for up to 20 MRJs. Deliveries to Rockton are set to begin in 2020.

The Japanese company has already secured orders for 407 jets, mainly in Japan and the US, but this would be the first order from Europe. Demand has picked up after the MRJ made its maiden flight last November.

Despite the stagnation in new sales due to the global economic slowdown, Mitsubishi Aircraft is stepping up its sales operation toward the goal of selling 1,000 planes.