The Strategist

Iran to buy 80 Boeing aircraft for $ 17 billion, nears a deal with Airbus

12/12/2016 - 15:04

On Sunday, Iran signed an agreement to purchase 80 passenger Boeings worth $ 16.6 billion. The country’s representatives also announced purchase of a dozen Airbus aircraft, thus concluding the biggest deal with Western companies since the 1979 Islamic revolution.

sota via flickr
sota via flickr
Under the deal, IranAir buys Boeings 737 MAX and thirty Boeings 777.

Iranian official told Reuters that IranAir is also on the "very final stages" of a deal with European Airbus. Once Western sanctions were lifted in January 2016, Tehran and Airbus entered into an agreement to purchase 118 aircraft.

The deal with the Airbus, which will include delivery of first 50-60 aircraft, will be completed in the next few days, the official said.

Contract with Boeing is the largest agreement between Iran and the United States after the fall of the Shah's regime. The deal removes the main technical obstacle to implementation of the last year’s pact between Tehran and world powers to resume trading in response to curtailing Iran's nuclear program.

However, the transaction can be impeded by with political resistance.

Republicans in Congress are trying to counter the nuclear agreement with Iran. The House of Representatives in November approved a bill on limiting financial transactions of American banks in an attempt to block sale of Western passenger planes to Tehran.

The Iranian official said that the deal with Boeing partially requires conclusion of additional financial arrangements. He added, however, that the financial transaction will be carried out beyond the US financial system.

Sources in the finance industry reported that Boeing has a financing plan for fifteen 777-300ER aircraft, to be delivered in 2018. Financing of the rest of aircraft may still be subject to discussion.

The deal could test relations of Boeing, America's leading exporter, and US President-elect Donald Trump, who last week complained about cost of a new presidential Boeing Air Force One.

Since the transaction is concluded for 10 years, Trump’s administration may have to extend validity of certain export licenses from the US. Trump is criticizing nuclear deal with Iran, the company is also alarmed by disagreements with China, which accounts for a fifth of Boeing’s supply.

Boeing itself said in a statement that the contract with Iran guarantees employment of tens of thousands of people who will be engaged in the production of 777-300ER aircraft, and about 100,000 professionals in the aerospace industry in the United States.

Tehran sees the deal as a key political test for pragmatic government of President Hassan Rouhani, who was criticized by supporters of the hard policy, resisting contact with the West. 

It is expected that Iran will receive the first Airbus aircraft in 2017.