Domestic Economy

Iran’s Airbus Jet Deal Gets Boost From Lease Finance

Under the deal, the leasing company would take over part of Iran’s order for dozens of new jetliners and then lease them to the country’s flag carrier
Iran’s Airbus Jet Deal Gets Boost From Lease FinanceIran’s Airbus Jet Deal Gets Boost From Lease Finance

Iran has reached a deal with a foreign leasing company to finance the first 17 jets it plans to buy from Airbus, breaking a logjam in efforts to import aircraft following the lifting of sanctions.

This was reported by Reuters that quoted “people familiar with the move”.

The deal removes a significant hurdle to securing the first tranche of jets, following uncertainty over financing and political opposition in the United States and Iran, though the sources caution months of talking have thrown up new potential hurdles.

Iranian officials declined to name the lessor involved, but industry sources said in September that Iran was in advanced talks with Dubai Aerospace about helping to finance the purchase.

“We have a deal to finance the first 17 aircraft,” a senior Iranian official told Reuters, without elaborating.

Dubai Aerospace and Airbus both declined to comment.

Under the deal, the leasing company would take over part of Iran’s order for dozens of new jetliners and then lease them to the country’s flag carrier.

A similar mechanism could be used to finance a provisional order for 20 turboprops from ATR, which is half-owned by Airbus, one of the people said. ATR had no immediate comment.

Tehran provisionally ordered more than 100 jets each from Airbus and Boeing this year after a deal with major powers to lift most sanctions on Iran in exchange for limits on its nuclear program.

Completing the rest of the Airbus deal depends on receiving US export licenses because of the number of US components in the aircraft. So far, Airbus has US licenses for 17 jets.

Airbus will unusually be paid in euros, avoiding dollars typically used by the aircraft industry. The US financial system remains closed to Iran under core sanctions dating back to the Islamic Republic’s 1979 revolution.

Talks are expected to resume soon between Iran and Boeing to finalize the US company’s deal to sell or lease more than 100 jets: a transaction that could also involve third parties.

A Middle East spokesman for Boeing, Fakher Daghestani, said it had been allowed by the US government to talk to approved Iranian airlines and that any final agreements would need further US approval.

The airplane deals represent a big economic prize for western companies and also help Iran renew its aging fleet of aircraft after years of economic sanctions.

But negotiations have been held up by the reluctance of many western banks to provide finance, fearing a regulatory backlash if there is a new setback in relations.

“We have deadlines to meet,” the Iranian official said.

Another senior Iranian government official said at least 20 western airplanes would be added to Iran’s fleet by March 2017, followed by another 25 over the following four months.

“Our main priority is our nation’s safety,” the official said in reference to Iran’s old fleet and patchy safety record. “That’s why the government is purchasing new planes.”

Iran agreed in January to buy 118 Airbus jets, including 12 A380s, the world’s largest jetliner.

The A380 part of the deal has already been thrown into doubt after some experts in Tehran objected that most Iranians would not benefit from the long-distance jet.

The A380s are only options, one Iranian official said.

Around six smaller jets that were originally meant to be delivered this year have also been discarded due to the delays in receiving US approvals, meaning the Airbus order—when completed—would involve no more than 100 jets, the sources said.

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