Domestic Economy

Boeing Signs $16.6b Deal for 80 Passenger Jets

Boeing will start delivering the planes from April 2018
The signing ceremony was held in Tehran on Sunday in the presence of Iranian officials and those from Boeing.
The signing ceremony was held in Tehran on Sunday in the presence of Iranian officials and those from Boeing.
Iran needs 400-500 planes in the next 10 years to renovate its aging fleet

Flag carrier Iran Air signed a final contract in Tehran on Sunday to purchase 80 passenger jets from American plane manufacturer Boeing.

The $16.6 billion deal includes 50 of Boeing’s narrow-body 737max 8s, 15 wide-body 777-300ERs and 15 777-9s, which will be delivered to Iran Air over 10 years, according to the website of the Ministry of Roads and Urban Development’s news service.

The signing ceremony was attended by Minister of Roads and Urban Development Abbas Akhoundi; his deputy Asghar Fakhrieh-Kashan; the head of Iran Civil Aviation Organization, Ali Abedzadeh; International Sales Executive at Boeing Commercial Airplanes Monte Frazier; and the planemaker’s regional director for commercial airplane sales contracts, Fletcher Barkdull.  

“We are happy to announce that, by signing this agreement, we will resume our relations with Iran Air,” Frazier was quoted as saying.

He stressed that the deal was signed after a lengthy process and “in close cooperation with the government of the United States”.

Boeing won US approval to sell its first jetliners to Iran in almost 40 years late September, paving the way for the biggest business transaction between Iran and the US since the 1979 Islamic Revolution.

The US Treasury Department’s Office of Foreign Assets Control has granted licenses to Boeing and its French rival Airbus for the first of a flurry of aircraft orders that Iran is counting on to upgrade its aging air fleet.

Parvaresh said Boeing will start delivering the planes from April 2018. “In 2018, six planes of this type [Boeing 777s] will be delivered. Also in 2019, six other 777s and in 2020, three 777s will be delivered to Iran,” he said.

“Based on the contract, as of 2021, Boeing will deliver to us between 10-12 planes each year. The planes could be financed by Boeing or third-party financers.”

  “Historic Day”

Boeing’s last airplane deliveries to Iran consisted of 747 jumbos that arrived in 1977, two years before the revolution, according to the company’s website.

The Islamic Republic’s flag carrier would add more of the iconic, humpbacked 747s. The US manufacturer is also helping Iran Air line up 29 planes from leasing companies.

“This is a historic day,” Akhoundi said on the sidelines of the signing ceremony. “We have taken the first step to renovate Iran’s air fleet.”

According to Akhoundi, Iran needs 400-500 planes in the next 10 years to renovate its aging fleet.

The deal with Boeing will add 5,000 seats to Iran’s Air fleet, “which is more than double the current capacity of Iran’s fleet”, he said, adding that the contract “will soon be complemented by the finalization of another deal to buy [close to] 100 Airbus and 20 ATR planes”.

The flag carrier signed a preliminary deal with Airbus soon after the sanctions imposed over Iran’s nuclear program were lifted in January as part of a deal with world powers to keep in check Iran’s nuclear program, aka Joint Comprehensive Plan of Action. President Hassan Rouhani confirmed the order for 45 single-aisle A320s and 73 A330, A350 during a January visit to Paris.

As Iran Air’s deals with Boeing and Airbus were negotiated alongside the nuclear deal, many analysts speculated that the election of the JCPOA-opponent Donald Trump in the US presidential elections in November would increase the risk of the cancellation of the plane deals that were already opposed by hardliners in the US Congress.

On November 18, a few days after the US elections, the US House of Representatives passed a bill to block the sale of commercial aircraft to Iran. The measure would bar US Treasury Department from issuing licenses that US banks would need to finance sales of commercial aircraft.

The measure is unlikely to become law during the current Congress. It would need to pass the Senate, where it would face stiff opposition from Democrats.

The White House said Obama would veto the measure even if it did pass the Senate. The administration believes the legislation would be a violation of the nuclear pact.

Although Airbus is based in France, it must have the US Treasury Department’s approval for the sale because at least 10% of the aircraft’s components are American-made.

Late November, the United States issued a second license to France’s Airbus to sell commercial planes to Iran Air. Some media outlets said the license was to cover 106 planes.

The second license comes after Airbus Spokesman Justin Dubon’s September announcement of the first such permits having been issued. Dubon said the first 17 planes would be A320s and A330s.


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