The Strategist

Boeing began trading with Tehran

06/20/2016 - 16:01

On Sunday evening, Head of Iran's Civil Aviation Organization (CAO) announced a contract with Boeing Aircraft Corporation to supply 100 aircraft to Iranian airlines. The deal is valued at $ 17 billion; it is going to make Boeing Iran’s largest US trading partner. Earlier, the Iranians have already signed a preliminary contract with Airbus for delivery of 118 aircraft worth $ 27 billion.

Head of Islamic Republic of Iran’s CAO Ali Abedzadeh told that his country and American Boeing Aircraft Corporation have reached an agreement for supply of 100 aircraft to Iran. The contract value is estimated at $ 17 billion. The deal is yet to be approved by US regulators; however, there is little doubt that that this is going to happen soon. Otherwise, a huge Iranian market will actually get in hands of Boeing’s main competitor, European concern the Airbus. Recall that previously, Iran has signed a contract for purchase of 118 aircraft worth $ 27 billion.

According to Ali Abedzadeh 230 aircraft out of 250 present in hangars of Iranian airlines require replacement. In total, since the middle of January when Iran has been partly freed from the international sanctions, the country has agreed to supply 200 aircraft from three Western manufacturers (Boeing, Airbus and ATR).

At the moment, the Iranians operate 60 Boeing aircraft, most of which was purchased before the 1978 Islamic Revolution.

Not all experts believe that the contracts on aircraft supply to Iran will be signed. The reasons are not political but rather economic. According to Richard Aboulafia, an analyst for Aviation and Space Teal Group, Iran simply does not have money to purchase the machines. "Of course, the agreement looks beautiful, but it has more words than money, - quoted by news service of Qatari TV channel "Al Jazeera". - Many financiers are not willing to finance aircraft deliveries to Iran ... Iran's economic model does not look like a recipe of success." However, other observers are seeing the aircraft delivery deals as almost a fait accompli. During the sanction decades, the situation with civil aviation in Iran has got so deplorable, that the authorities are likely to go to any lengths to get new planes.

Iran is in dire need of replenishment and renewal of its fleet. Of 250 commercial aircraft existing in the country, 150 are operating now. Sparing parts for others are missing, since the details were not available in the country during the years of sanctions. Majority of the Iranian aircraft were purchased over 25 years ago, and Boeing planes that Iranians have now, were bought before the Islamic revolution. Once the Western sanctions imposed because of Iran's nuclear program were partly removed, the Iranian authorities have announced their intention to purchase 400 or even more new aircraft in the next few years. The government need the machines to meet demand for passenger air transportation market. In January, Iran announced an agreement with Airbus Group to buy 118 aircraft - from small to Airbus A380 - worth a total of $ 27 billion.