Economy, Business And Markets

Boeing: If Iran Deal Blocked, Rivals Must Be Halted Too

Boeing: If Iran Deal Blocked, Rivals Must Be Halted Too
Boeing: If Iran Deal Blocked, Rivals Must Be Halted Too

Boeing’s commercial jetliner chief says if its deal to sell Iran passenger aircraft is blocked by the US Congress, all other US companies that supply to its rivals should be prohibited as well.

Ray Conner, the chief executive of Boeing’s commercial jetliner unit, said in a media presentation Sunday on the eve of the biennial Farnborough Air Show outside of London that any effort to legislatively block its deal with Iran Air should not unfairly disadvantage the planemaker against its rivals, The Wall Street Journal reported.

The US House of Representatives last week passed amendments that would block the use of Department of Treasury funds for granting licenses for export or reexport of commercial passenger aircraft and their parts and services as enabled by the nuclear deal between Iran and world powers last year.

A further amendment would prohibit any US financial institution from participating in the export of passenger aircraft to Iran.

The move, however, is widely expected to be vetoed by the administration of US President Barack Obama.

Airbus has said it, too, requires Washington’s approval to export airliners to Iran because the planes involve US-made parts.

The global business of selling jetliners means US firms such as engine makers and providers of other components contribute significantly to the designs of Boeing’s biggest rivals like Europe’s Airbus Group SE.

Airbus in January signed a cooperation agreement for supplying 118 jetliners to Iranian airlines.

The amendments passed last week by the House “will be between Congress and the administration and we’ll follow the lead of which the government tells us what we can do and what we can’t do,” Conner said. “If we’re not allowed to go forward, then sure as heck no other US company should be allowed to go forward either. That would mean any other US supplier to any other manufacturer.”

The recent development regarding the Iran-Boeing deal come, as deputy spokesperson at the US Department of State Mark C. Toner confirmed in a press briefing in April that the US is committed to issue due licenses for the sale of aircraft to Iran.

“In general, the US, as part of the JCPOA, is committed to license three limited categories of activity that would otherwise be prohibited … one of those things includes the licensing of sale to Iran of commercial passenger aircraft,” he has been quoted as saying.

Under a preliminary agreement with Iran unveiled last month, Boeing is to supply over 100 aircraft to Iran, including small and large jetliners worth more than $20 billion at list prices, both through direct sale and leasing.

The agreement includes 80 aircraft worth $17.58 billion to be sold directly by Boeing, including 34 wide-body jets: 15 each of the 777-300ER and 777-9 models and four of the 747-8. It also includes the direct sale of 46 narrow-body jets: 40 of the upcoming 737 MAX model and six of the current 737NG model.

Under the same provisional deal, Boeing will arrange for Iran Air to acquire a further 29 737NG aircraft through leases. Deliveries of the purchased jets are scheduled to start in 2017 and run through 2025.

The Boeing agreement came after a January deal with the US planemaker’s French rival Airbus to buy 118 passenger planes worth $25-27 billion at list prices.

The Airbus accord covers 45 single-aisle planes comprising 21 from the current generation of A320 family and 24 re-engined A320neos. There are also 73 wide-body aircraft, including 27 A330s, 18 A330neos and 16 of Airbus’s latest A350s.

Based on the draft agreement, Iran also has the option to add up to 12 A380s to these purchases in the upcoming years.

Iran has sought to modernize its decrepit fleet of airliners, decimated by years of sanctions that prohibited it from acquiring new jets or buying spare parts from their manufacturers.

The promise of renewed airlines in the Islamic Republic has been used as a significant incentive to enticing Iran to abide by the terms of the nuclear deal, which went into effect in January.

Iran needs an estimated 400 jets to renew its fleet after decades of sanctions and to prepare for projected growth.