The US Treasury Department’s recent decision to grant export licenses to Airbus and Boeing to sell commercial airplanes in Iran is a credit positive development for both companies and the broader commercial aerospace supply chain, says Moody’s Investors Service in a new report on Friday.
“The US Treasury announcement lends further support to our positive view of the commercial aerospace market,” says Moody’s Senior Vice President Russell Solomon. “After a short period of pause in 2015-16 we continue to believe the commercial aerospace market will resume its growth in deliveries at higher rates in 2017-18.”
Moody’s estimates that Iran affords large commercial aircraft manufacturers a prospective boost of as much as 3% to future industry demand through the next decade, or about 400-500 jets for Iranian airlines.
The credit rating agency believes the development paves the way for multi-billion dollar deals if current agreements and definitive sales transactions are in fact completed. However, the licenses awarded to Airbus and Boeing governing the prospective sale of new aircraft to Iran do include important restrictions that will likely materially weaken the underlying value of the acquired assets and their ability to be financed.
The approvals from the US Treasury Department on Wednesday allow Airbus and Boeing to proceed with sales worth billions of dollars into a country that had been entirely off-limits prior to Iran’s landmark 2015 nuclear deal with the six world powers.
