Economy, Business And Markets

Airbus: Financial Hurdles Obstructing Iran Deal

Airbus: Financial Hurdles Obstructing Iran Deal Airbus: Financial Hurdles Obstructing Iran Deal

Concerns in the financial community about doing deals in Iran are hampering Airbus Group SE’s ability to close a multibillion-dollar aircraft pact with Tehran, the European plane maker’s head of sales said Wednesday.

“We have to find ways to get money out of Iran through the banking system,” The Wall Street Journal quoted John Leahy, Airbus chief operating officer for customers, as saying.

“While progress has been made, it has been slower than expected.”

Even as the US and European governments are now looking to foster transactions, banks remain reluctant to cut deals after facing fines imposed by US regulators on lenders when western sanctions on Tehran were in place.

“They are all very shy,” Leahy said.

Iran, with a population of more than 80 million and pent-up demand for travel after years of isolation, represents one of a few large untapped markets for new planes.

Leahy said Iran has “an ancient fleet” that needs replacing and will enjoy growth as the country’s economy recovers.

IranAir Chief Executive Farhad Parvaresh acknowledged that the banking issue is one of the biggest hurdles to closing plane deals.

The airline also is discussing a potential order with Boeing Co., the world’s largest plane maker by deliveries.

“IranAir has now met twice with the US company and talks are progressing,” Parvaresh said in an interview. He wouldn’t say when a deal might be sealed.

Boeing chief executive Dennis Muilenburg on Thursday said Iran’s demand for airliners was real and the prospect of a major order there was moving closer.

International banking limits on Iran were lifted this year in return for Tehran limiting its nuclear program, though US restrictions remain.

Oil companies also have struggled to line up big banks to back deals.

In some cases, they have resorted to barter arrangements or using smaller banks. And that approach is also serving plane makers.

ATR’s chief executive, Patrick de Castelbajac, said Franco-Italian turboprop maker ATR is putting together a mix of banks and lessors to help finance the euro-denominated sale of 40 of its planes to Iran.

The company hopes to deliver the first of its regional planes by the end of the year.

The Airbus deal is far larger, though, making it more difficult to work without big financial institutions.

Iran announced a deal to buy 118 airliners from Airbus valued at $27 billion at list price. The deal, which has not been completed yet, includes aircraft as diverse as Airbus single-aisle planes and 12 of its flagship A380 superjumbos, which carry a list price of $432.6 million each, though buyers typically get discounts.

“If you don’t sort it out, there aren’t going to be any deals done,” Leahy said.

The reluctance of bankers is not the only obstacle to completing agreements for jetliner sales. Airbus and others are still awaiting approval from the US Treasury’s Office of Foreign Assets Control to sell their planes, which have US content.

Castalbajac said a decision was expected months ago.

“The US government is facing a flood of license applications, not just for aircraft deals,” he said.

Airbus commercial airplane boss, Fabrice Bregier, said on May 31 the company was making progress in securing the export licenses for the deal, but more work is needed. He remained optimistic the deal would be completed this year.

Parvaresh said he was hopeful that after the export licenses are issued, banks would feel more comfortable financing such deals.


Lockheed Mulls Selling Helicopters to Iran

Lockheed Martin Corp, the largest US arms maker and parent of Sikorsky, has begun to study the possibility of selling commercial helicopters to Iran.

Lockheed, along with Boeing Co, is one of the first major US aerospace companies looking into selling to Iran for the first time since US sanctions were imposed following Iran’s Islamic Revolution of 1979, Reuters reported.

Nathalie Previte, vice president of sales and marketing for Sikorsky, said the company had received numerous inquiries from customers, including leasing companies and operators, interested in possible helicopter operations in Iran.

“Sikorsky’s S-76 and longer-range S-92 commercial helicopters could be options for Iran,” Previte said, although she added that the country has little of the offshore drilling activity that drives helicopter demand in the oil and gas sector.

Lockheed is mainly a government and defense contractor, but entered into the commercial market with its purchase of helicopter maker Sikorsky from United Technologies Corp last year.

“Sikorsky is still working through the regulatory and compliance issues with the US government,” Previte said.

AgustaWestland, a unit of Italy’s Leonardo Finmeccanica SpA, also has seen interest in its helicopters from operators looking to do business in Iran, industry sources said.