Boeing Signs Agreement with Iran -- 2nd Update
June 21 2016 - 7:14AM
Dow Jones News
By Robert Wall
LONDON-- Boeing Co. Tuesday said it had signed a tentative
agreement to sell jetliners to Iran, in what would be one of the
Islamic republic's biggest deals with a U.S. manufacturer since
trade sanctions on Tehran were eased.
The proposed deal comes after months of talks between Boeing and
Iran Air about a deal. Details of the potential transaction haven't
been disclosed by Boeing, although Iranian Transport Minister Abbas
Akhoundi told state television Tuesday that the deal could have a
value of up to $25 billion, according to the Associated Press.
"Boeing confirms the signing of a Memorandum of Agreement (MOA)
with Iran Air expressing the airline's intent to purchase Boeing
commercial passenger airplanes," the world's largest plane maker
said.
Iran's airlines have indicated a dire need for both medium-haul
jets like Boeing's single-aisle 737 and long-haul aircraft like its
777 and 787 Dreamliners.
State-owned Iran Air Monday said it planned to lease 737 and 777
planes pending approval from its own government and the U.S.
Completing an agreement with Iran Air could take months, amid
continued uncertainty from lenders about financing deals with Iran
and the need for the U.S. government to sign off on any sale.
The potential plane sale isn't without critics. Two U.S.
Congressmen, Jeb Hensarling (R., Texas) and Peter Roskam (R.,
Ill.), last week sent a letter to Boeing expressing concern a plane
deal could aid Iran's military. "Iran's commercial aviation sector
is deeply involved in supporting hostile actors," they said in the
letter in which they requested information to assess the national
security implications of selling planes to Iran.
"Boeing will continue to follow the lead of the U.S. Government
with regards to working with Iran's airlines, and any and all
contracts with Iran's airlines will be contingent upon U.S.
Government approval," the Chicago-based plane maker said.
John Smith, acting director of the U.S. Treasury Department's
Office of Foreign Assets Control, last week said at the Atlantic
Council in Washington, D.C. that "it is possible for authorized
deals to get financing."
In January Airbus Group SE announced an agreement with Iran for
118 new jets, underscoring Iran's interest in restoring commercial
links with Europe, as well as the country's urgent need for new
commercial aircraft.
The deal, which had a list price value of about $27 billion,
hasn't been completed because of concerns in the financial
community about doing deals in Iran. Airbus is also still waiting
for an export license from the U.S. government for the planes.
Airbus commercial airplane boss Fabrice Brégier recently said
the company was making progress securing the export license, but
more work was needed. He remained optimistic the deal, which would
include Iran's purchase of 12 A380 superjumbos, could be completed
this year.
Franco-Italian turboprop maker ATR is putting together a mix of
banks and lessors to help finance the euro-denominated sale of 40
of its planes to Iran, the plane maker's Chief Executive Patrick de
Castelbajac said this month. The company hopes to deliver the first
of its regional planes by the end of the year.
Canadian plane maker Bombardier Inc. also said it is eyeing the
Iranian market. The initial focus would be on selling regional
planes, Fred Cromer, president of Bombardier Commercial Aircraft,
said this month.
Iran is considered one of the most promising growth markets for
plane makers after decades of sanctions have left the country with
some of the world's oldest airliner fleets.
The European Union last week eased restrictions on Iran Air
flights. The carrier since 2010 was limited to using a small number
of specified planes to serve destinations in the EU because of
safety concerns with some of the other aircraft. Those restrictions
were lifted following an inspection this year for all but some of
the carrier's oldest planes.
The U.S. has maintained sanctions over the sale of planes to
some Iranian carriers because of concern they are involved in
supporting terrorism. The Iranians deny the charge.
Aresu Eqbali in Tehran and Jay Solomon contributed to this
article
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
June 21, 2016 06:59 ET (10:59 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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