Economy, Business And Markets

Boeing Remains Optimistic Despite Iran’s Deal With Airbus

Boeing Remains Optimistic  Despite Iran’s Deal With AirbusBoeing Remains Optimistic  Despite Iran’s Deal With Airbus

Last week, Iran announced preliminary plans to buy 118 planes from France-based Airbus in a deal worth roughly $27 billion.

This is while no deals have been announced with the US planemaker Boeing, Airbus’s arch-rival, as Iran is replacing its fleet of aging commercial aircraft following the lifting of western sanctions over its nuclear energy program.

“The US is still keeping some sanctions against Iran in place. Boeing would need to clarify a number of things before working out a deal,” says Adam Pilarski, vice president of Avitas—an aviation consultancy group—as reported by Washington-based media organization National Public Radio that serves as a national syndicator to a network of 900 public radio stations in the United States.

“There are various complicated legal issues that many lawyers have to go through [as a result of US sanctions],” he says.

Pilarski said it is normal for a country buying aircraft to play two companies off each other for better price leverage in negotiations. He says it is likely Boeing is already quietly exploring a deal.

“I would be very surprised if Iran only buys airplanes from Airbus and none from Boeing. That would be a huge surprise to me,” he says.

Ardavan Amir-Aslani, a French-Iranian lawyer who is negotiating deals with Tehran for French companies, claims the Airbus deal is not set in stone.

“The agreements that have been signed are not definite, final documents,” he says.

The lawyer says financing the Airbus deal is a challenge because it has to be done without using the US financial system. US banks are still barred from doing business in Iran, and most foreign banks have partnerships with US banks.

Amir-Aslani says there is a difference between announcing a deal with Airbus and having an actual contract in hand.

“We’re talking about memorandums of understanding or letters of intent. So the actual implementation of these contracts is going to happen over time,” he says.

As Iran may have other more pressing needs for its money—from rebuilding its infrastructure to modernizing its oilfields, Richard Aboulafia, an analyst with the Teal Group—an aerospace consultancy, says Iran may decide to lease new planes, not buy them.

  DAE to Up Portfolio Amid Iran Demand

On this note, Dubai Aerospace Enterprise—one of the few aircraft leasing firms in the Persian Gulf region—says it expects to add 30-35 planes to its current portfolio of 97 with significant demand seen coming from Iran, UAE-based magazine Arabian Business reported on its website.

“Iranian airlines will be looking to lease aircraft that are immediately available while they await the European deliveries,” said DAE chief executive, Firoz Tarapore.

“We hope to book another 30-35 aircraft—the demand will be across the spectrum—narrow and wide bodies, and turboprop aircraft,” Tarapore said.

Shortly before delivery, airlines look for funding from banks or leasing firms to pay for their purchases. A popular structure is for airlines to sell and then lease back planes.

DAE has 37 ATR 72-600s, plus 20 on option, and this is an aircraft Iran has agreed to buy from a firm co-owned by Airbus Group and Italy’s Finmeccanica.