Iran cannot afford to pay in cash for the order it placed with Airbus, says deputy minister of roads and urban development Asghar Fakhrieh-Kashan.
“We have not held any negotiations over cash payment for new planes,” he was quoted as saying by ILNA on Monday, adding that “even if we did, we lack the financial resources to make the purchase”.
Fakhrieh-Kashan is directly involved in negotiations with Airbus and Boeing.
His remark came after Claude Brandes, Airbus’s vice president with responsibility for customer finance in the Mideast, said the French planemaker 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
Brandes noted that the aircraft “was discussed as part of a package” and a final contract would still need to be signed, Bloomberg reported.
Earlier this month, it was reported by Reuters that Iran had reached a deal with a foreign leasing company to finance the first 17 jets it plans to buy from Airbus. The company was tipped to be Dubai Aerospace.
Under the deal, the leasing company would take over part of Iran’s order for dozens of new jetliners and then lease them to the country’s flag carrier, the report added. Dubai Aerospace and Airbus both declined to comment.
After last year’s nuclear deal between Iran and the world powers led to sanctions removal in January, Iran signed a draft agreement with Airbus to buy 118 jetliners worth $27 billion at list prices.
The deal was followed by another multibillion dollar agreement with Airbus’ American rival Boeing for more than 100 passenger aircraft.
Iran’s Minister of Roads and Urban Development Abbas Akhoundi said the orders would meet part of Iran’s need for 500 planes within the next 10 years.
Both Airbus and Boeing have been granted initial permits by US Treasury Department’s Office of Foreign Assets Control to do business with Iran. Airbus also needs a US export license as it uses over 10% of parts manufactured in the United States.
Analysts have voiced concern that a recent vote in the US House of Representatives to ban Boeing and Airbus from doing business with Iran might put the plane deals at risk. The vote came a few days after Donald Trump was elected as the next US president.
Brandes said his company is evaluating the implications of the congressional vote and that the vote has created a “state of uncertainty” 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.”
Fakhrieh-Kashan said negotiations with Airbus and Boeing will continue this week in Tehran.