Economy, Domestic Economy

Iran Receives 1st Airbus Jet

Iran Receives 1st Airbus Jet
Iran Receives 1st Airbus Jet
An Iran Air team is in Hamburg, Germany, where the plane has been assembled, to prepare it for delivery in Tehran on Thursday after it is transferred to Airbus headquarters in Toulouse, France

Iran Air has taken the delivery of an Airbus A321, which will be the first jetliner to be delivered to Iran from among 100 planes the French planemaker has agreed to supply after the lifting of economic sanctions last year.

The flag carrier’s CEO Farhad Parvaresh said on Sunday an Iran Air team was in Hamburg, Germany, to prepare the plane for its delivery later this week.

“Based on what we know … an Iran Air pilot will land the plane on Thursday,” he was quoted by the Ministry of Roads and Urban Development's news service as saying.

Airbus confirmed Iran Air had received its first new jet.

“The technical acceptance has been done with formal delivery still to be done,” an Airbus spokesman was quoted as saying by Reuters.

A spokesman for Iran's Civil Aviation Organization also said the aircraft has been placed on the country's aircraft register.

"The registration has been done and the delivery should be done by the end of the week," Reza Jafarzadeh told Reuters by telephone.

The 189-seat jet was assembled in Hamburg. From there, it is expected to be transferred to Airbus headquarters in Toulouse, France, for a formal handover on Wednesday.

Parvaresh said there would be an official ceremony to mark the arrival of the plane in Tehran. He also noted that the plane will be initially used in domestic flights upon delivery.

The Airbus A321 jetliner, painted in Iran Air livery, will be the first plane from a multibillion dollar order Iran secured last month.

The deal took weeks of shuttling between Airbus headquarters and Tehran, complicated by a shortage of expert legal advice, as Iran completes its biggest commercial deals with the West since its 1979 Islamic Revolution.

Airbus had said almost half the jets would be for short to medium routes and that deliveries would start early 2017.

Iran had said it expected the delivery of a total of eight Airbus planes, including one A321 narrow-body and two long-range A330s, along with ATR planes by March 20.

The contract Iran signed with Airbus on December 22 includes 46 of the narrow-body A320 family that includes the A321 model, 38 long-haul A330s and 16 of Europe's newest long-range model, the A350.

Such a deal would be worth $18-20 billion at list prices, depending on variants flown, but Iran is expected to receive steep discounts from foreign manufacturers.

The head of Iran Air was quoted as saying earlier that the value of the contract would not exceed $10 billion.

It is expected to be followed by a formal deal to buy 20 turboprop aircraft from ATR, half-owned by Airbus.

> Financing Process Making Headway

Parvaresh said Iran Air will use an Airbus backstop financing for the first six deliveries, but the rest will be financed by third-party international financiers.

So far two financiers, one from a Persian Gulf littoral state and another from China, have offered to finance the planes, he said, without further elaboration.

Industry sources said in September that Iran was in advanced talks with global aerospace corporation Dubai Aerospace about financing the purchase.

“We have a deal to finance the first 17 aircraft,” a senior Iranian official told Reuters, without elaborating.

Dubai Aerospace and Airbus both declined to comment.

Based on the financing model agreed in the contract, Iran will pay less than 20% of the cost of the planes, and the rest will be covered by financing companies.

Sukuk Sale

Iran Air is also planning to sell $500 million worth of sukuk bonds to cover a portion of what the company should pay in cash to Airbus.

The Airbus contract came days after Iran signed a similar deal with the planemaker's American rival Boeing for 80 jets.

All sides have an interest in moving quickly. The Iranian government wants to show results from the nuclear deal it clinched with the world powers in July 2015, Airbus wants to get deliveries moving and Boeing wants the leverage it can get from European deliveries to Iran.

Despite rivalries, the Airbus and Boeing deals with Iran are unusually intertwined because each depends on continued US clearances for the sale of planes built with US parts.

The ability to renew Iran's aging and accident-prone fleet is widely viewed as a test of the pragmatist policies of Iranian President Hassan Rouhani ahead of presidential elections in May.

As it stands, the first Airbus will be delivered before the January 20 inauguration of US president-elect, Donald Trump, who has opposed an international deal to lift sanctions in return for curbs on Iran's nuclear activities.

Although Airbus said the deal was subject to US Treasury export licenses granted in September and November 2016, Republican critics of the nuclear pact want Trump to block the aircraft deals and have sought to hamper them by voting to tighten restrictions on the use of the US financial system.

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