U.S. Gives Airbus Go-Ahead to Send 17 Airliners to Iran -- 2nd Update
September 21 2016 - 12:57PM
Dow Jones News
By Robert Wall and Doug Cameron
The U.S. government has given plane maker Airbus Group SE the
all-clear to deliver jetliners to Iran Air in one of the
highest-profile trade breakthroughs since nuclear sanctions were
lifted on the Islamic Republic in January.
Western powers removed sanctions on Iran in return for the
country agreeing to constrain its nuclear program. Business has
been slow to materialize, though, amid concern among western
businesses of running afoul of continued U.S. restrictions on doing
business with Iran.
Iran Air first announced in January it planned to buy Airbus
planes, but the transaction stalled amid a lack of approvals from
the U.S. Department of the Treasury's Office of Foreign Assets
Control rules. OFAC had to approve the license because a portion of
Airbus planes are made in the U.S.
The green light for Airbus to transfer 17 planes to Iran Air
signals the tide may be turning for doing business with Iran.
Airbus on Wednesday said some of those deliveries may occur as
early as this year, a spokesman said.
Airbus rival Boeing Co., the world's largest plane maker by
deliveries, said, "We believe their license application was
submitted prior to our similar request and that the government
follows a 'first in, first out' policy. We look forward to
receiving our license from the government shortly."
Boeing aims to sell 80 jets directly to Iran Air as part of a
proposed deal worth up to $17.6 billion. It would be among the
largest by a U.S. firm since the sanctions were loosened.
Iran this year announced multibillion-dollar deals with Airbus
and Boeing to kick off a fleet renewal program after years of
sanctions. Some of the plane-related trade restrictions predated a
disagreement between western powers over the country's nuclear
program and were imposed in the wake of Iran's revolution in
1979.
The limits on acquiring new planes has left Iran with airlines
that operate some of the oldest jetliner fleets. Those have led
them to face restrictions on flying to some markets because of the
age of the equipment. Some airlines remain under sanction because
of U.S. allegations they have links to terrorist activities and
Iran's weapons program.
Iran's plan to buy western planes has run into opposition in its
own country and the U.S. Some U.S. lawmakers are trying to bar the
sale of Boeing planes to Iran.
Other obstacles remain, too, including plane financing. The U.S.
approval "does not make the use of dollars significantly easier. So
any financing will have to be in euro, already a challenge for a
dollar-denominated asset," said Bertrand Grabowski, managing
director of aviation finance at DVB Bank SE.
He added that government export credit agencies will have to
play "a critical role for the first financing, there is no
alternative." That could be a challenge for Boeing. The U.S.
government's Export-Import bank, which can back plane deals, is
restricted from supporting Iran-related transactions.
The Airbus deal had a list price value of $27 billion and
included aircraft as diverse as Airbus single-aisle planes and 12
of its flagship A380 superjumbos, which carry a list price of
$432.6 million each, though buyers typically get discounts.
The license approval from the U.S. government allows Airbus to
deliver A320 single-aisle planes and A330 widebodies to Iran Air.
Airbus sought the approvals to expedite the process. The spokesman
said the Toulouse-based plane maker expected the U.S. to green
light the second license in the coming weeks.
Write to Robert Wall at robert.wall@wsj.com and Doug Cameron at
doug.cameron@wsj.com
(END) Dow Jones Newswires
September 21, 2016 12:42 ET (16:42 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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