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Iran Air Will Fly American New Boeings Again

Boeing 777 (photo en.avia.pro)

Iran Air old Jumbo B - 747 (Photo file)

Boeing 777 (photo en.avia.pro)

Boeing 777 (photo en.avia.pro)

(WEBPUBLICAPRESS) New York – Iran has recently announced will by American commercial airplanes, and the price for 80 new Boeing airliners will be as Boeing had previously said –  worth $16.6 billion. The sale includes 50 twin-jet, narrow-body 737 planes and 30 long-range, wide-body 777 aircraft. The first airplanes are scheduled for delivery in 2018, with the entire order being fulfilled over 10 years - news sources reported.

“Boeing has announced that its IranAir contract is worth $16.6 billion. However, considering the nature of our order and its choice possibilities, the purchase contract for 80 Boeing aircraft is worth about 50 percent of that amount,” said Deputy Transport Minister Asghar Fakhrieh-Kashan, quoted by Iran’s IRNA state news agency in December.

Then there is the question of how much funding the Ex-Im bank may have provided to Iran: when all is said and done, it is possible that the Persian nation ended up paying nothing out of pocket, and merely funded its purchase of Boeing airplanes with a generous loan from Uncle Sam.

As part of Iran’s return to a post-sanctions world, Boeing and Airbus both signed huge contracts this month to supply airliners to Iran, the first such deals since international sanctions were lifted under a deal to curb Tehran’s nuclear program.

Iran’s recent return on good terms with the US has meant few have benefited as much as Boeing. as replacing the Middle-eastern nation’s antiquated civil aviation fleet is one of the biggest economic opportunities of the 2015 accord to lift sanctions, negotiated President Barack Obama, who several years ago also imposed the same sanctions. Donald Trump has been a vocal critic of the pact, and his recent tweets have hardly benefited Boeing.

Even better news for Iran is that its need to replace its old planes comes at a time when Boeing, Airbus and smaller planemakers have all faced a downturn in orders, and are therefore expected to offer deep discounts, in this case roughly “half off” on new airplanes.

Meanwhile, Airbus’s contract to sell 100 jets to IranAir, signed in December 2016, would be worth $18-$20 billion at list prices, but the head of IranAir has been quoted as saying the value of the contract would not exceed $10 billion, again suggesting that the demand for new airplanes across the world has collapsed if the world’s two major aircraft producers are willing to offer half off terms to any marginal buyer.

Iran Air old Jumbo B - 747 (Photo file)

Iran Air old Jumbo B – 747 (Photo file)

The government of President Hassan Rouhani, a pragmatist, has pushed to finalize aircraft deals to show results from the nuclear accord with world power to end sanctions; the smart move also makes it unlikely that Trump will be able to undo the sanctions once financing commitments are in place with the Iranian nation, the proud host of brand new Boeing and Airbus planes. Ironically Rouhani faces criticism at home from hardliners over the cost of the purchases which could well be zero.

According to Reuters, Fakhrieh-Kashan also said on Sunday that IranAir may exercise an option to buy 20 more aircraft from ATR, a European maker of regional turboprops, in addition to a planned firm order of 20. A team from the plane-maker was already in Tehran for final talks. According to IRNA – “the purchase of 20 planes has been finalised and Iran may buy 20 more planes,” said Fakhrieh-Kashan, adding that the contract for 20 planes was worth less than $500 million. It was not immediately clear if the sticker price for the order was $1 billion an higher.

Iran’s orders aside, with global demand for airplanes – pardon the pun – crashing, it is not clear how this core component of exportable US Durable Goods, and US GDP, will fare in a year when the USD is already soaring and set to hit US exports significantly. One thing we do know, however, is that if and when GDP prints soft in the next quarter or two, the “economists” will just blame the weather as they always do, or perhaps just blame Trump, same news source reported. 

In January 2016, US President Barack Obama has lifted a decades-old ban on the export of civilian passenger aircraft to Iran as Tehran prepares to see sanctions relief.

President Obama delegated that authority to Secretary of State John Kerry through a presidential memorandum, a directive similar to an executive order.

The historic decision comes against the backdrop of planned implementation of Iran’s historic nuclear deal with world powers at the weekend, Iran Press TV reported.

“They have nearly completed their major nuclear steps, and that’s nothing to gloss over,” US Deputy National Security Adviser Ben Rhodes said.

He added that the decision would take effect as soon as the nuclear agreement is implemented and international sanctions are lifted on Iran.

“The [nuclear] agreement makes two exceptions: Iran can buy U.S. civilian passenger aircraft, and sell certain crafts – specifically carpets and rugs – to the United States,” USA Today reported.

US sanctions ban the sale of aircraft and parts to Iran. Under an interim nuclear deal in 2013, the West eased the ban on sales of spare parts but selling planes is still prohibited.

 

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