Airbus Gets Green Light for First Chance to Sell Planes to Iran
DUBAI, UNITED ARAB EMIRATES—Airbus on Wednesday became the first airplane manufacturer to get U.S. government permission to sell aircraft to Iran following last year’s nuclear accord, getting final approval for a 17-plane sale that’s part of a larger $25-billion (U.S.) deal.
The European aviation company’s announcement, coming as Iranian and U.S. leaders are in New York for the United Nations General Assembly, showed that the outgoing administration of President Barack Obama is honouring the economic terms of the pact.
The next administration, however, may change that equation for Airbus and Chicago-based Boeing Co., which has its own $25-billion deal on the line with Iran that would be the biggest for an American company since the 1979 Islamic Revolution and U.S. Embassy takeover.
Though based abroad, Airbus needed the approval of the U.S. Treasury’s Office of Foreign Assets Control for the deal as at least 10 per cent of Airbus components are of American origin.
Airbus applied for two licences to cover its deal with Iran to ensure the fast delivery of some of the aircraft, Airbus spokesman Justin Dubon told The Associated Press. The licence announced Wednesday covers the first 17 planes involved in the deal, which will be will be A320s and A330s, he said.
Dubon declined to offer a breakdown of how many of each model are involved in the initial sale, but said Airbus hoped to receive a second license allowing it to sell the remaining planes to Iran.
Iran’s UN mission did not respond to a request for comment Wednesday. State television referred to an Associated Press report on the sale.
In January, national carrier Iran Air signed agreements to buy 118 planes from Airbus, estimated to be worth some 22.8 billion euros ($25 billion U.S.). The deal included 21 A320ceos, 24 A320neos, 27 A330ceos, 18 A330neos, 16 A350-1000s and 12 double-decker A380s.
On Sunday, Asghar Fakhrieh Kashan, a deputy transportation minister, told reporters that he expected U.S. permission for all aircraft purchases “by the end of September” and that several airplanes would arrive by mid-March. However, he also said Iran would cut the number of Airbus planes it would buy to 112, state TV reported.
Base model A320s are listed at an average of $98 million, while A330s start at $231.5 million. That puts the value of the approved 17 aircraft in the first licence around at least $1.8 billion and possibly much higher based on list prices, though buyers typically negotiate sizable discounts for bulk orders.
Most Iranian planes were purchased before the Islamic Revolution that ousted Shah Mohammad Reza Pahlavi and brought Islamists to power. Out of Iran’s 250 commercial planes, 162 were flying in June, while the rest are grounded due to lack of spare parts.
Iran’s nuclear deal with world powers, which limits its enrichment of uranium in exchange for the lifting of some international sanctions, specifically allowed for the purchase of aircraft and parts. That’s set off a race between airplane manufacturers for the newly opened market, home to 80 million people.
Airbus’s announcements will be closely watched by Boeing, which has its own deal on the line. In a June letter to U.S. Congress, Boeing said the deal involves Iran Air buying 80 aircraft with a total list price of $17.6 billion, with deliveries beginning in 2017 and running until 2025. Iran Air also will lease 29 new Boeing 737s.
Iran also has ordered 20 airplanes from French-Italian aircraft manufacturer ATR.
In a statement, Boeing spokesman Marc Sklar said his company believed Airbus applied for its licence before it did and that the U.S. government “follows a first-in, first-out policy.”
“We look forward to receiving our licence from the government shortly,” he said.
However, the Boeing deal has been criticized by American lawmakers over Iran’s “pernicious behaviour,” including launching ballistic missiles, firing rockets near U.S. warships in the strategic Strait of Hormuz and briefly detaining American sailors who strayed into its territorial waters.
The U.S. presidential election could also have an effect on the sales. Republican presidential candidate Donald Trump has threatened to tear up the nuclear deal if elected this November.