Economy, Business And Markets

Airbus Frets Over US House Iran Vote

Airbus Frets Over US House Iran Vote
Airbus Frets Over US House Iran Vote

Airbus says it is evaluating the implications of a congressional vote that could block it and Boeing from providing jets to Iran, as a $27 billion order announced in January is at stake.

“The French company will wait to see how the US Senate and President Barack Obama respond to the House decision,” Claude Brandes, the French planemaker’s vice president with responsibility for customer finance in the Mideast, said in an interview with Bloomberg.

Even if the Iran sale wins a reprieve, the vote has created a “state of uncertainty” just as the European company is negotiating final terms.

“Whatever the substance of the measure, it’s not great in terms of timing,” Brandes said. “We need to see the wording and we need to see how the Iranians react.”

Whether or not Obama vetoes the House measure, as the White House has suggested, it “doesn’t bode well” for when president-elect Donald Trump takes over, he said.

Trump has said he wants to tear up the nuclear deal to which the aircraft sales are tied. Iranian statesmen have responded by saying that if the US tears up the deal, they will burn it as Iran has nothing to lose.

Brandes said Airbus might be able to go ahead with the delivery of a single A321 narrow-body before the end of this year should Iran pay in cash, though the aircraft “was discussed as part of a package” and a final contract would still need to be signed.

Even if the Airbus deal survives Republican opposition, it may not translate into a firm contract for all 118 aircraft specified, given that Iran signed an accord with Boeing for 109 planes five months later, with the final split between the manufacturers remaining in a state of flux, the executive said.

The eventual numbers may be determined by Iran’s success in securing funds, which has been complicated by the political sensitivities of the deal.

“While the US Treasury Department in September granted Airbus a license to supply the first 17 jets, Iran is seeking financing from Dubai Aerospace Enterprise, which would require further authorization,” Brandes said.

Iran wants jets, including Airbus’s most modern A350 and the A380 superjumbo, and has signed up for 747 jumbos, the 777 and 777X upgrade from Boeing. The US company is looking to provide 80 aircraft worth $17.6 billion directly, plus a further 29 jets via leasing companies.

Iran has agreed to redesign and reduce its nuclear facilities in exchange for relief from economic sanctions. The agreement dubbed Joint Comprehensive Plan of Action was signed last year and went into effect in January this year.

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