BA Boeing Co

By Robert Wall and Doug Cameron 

The U.S. government has given plane makers Boeing Co. and 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 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.

Airbus, which was first to secure a plane deal with Iran, was first to receive the green light to transfer 17 planes to Iran Air, signaling the tide may be turning for doing business with Iran. Hours later Boeing, the world's largest plane maker by deliveries, said it too had received its corresponding license.

Airbus on Wednesday said some of those deliveries may occur as early as this year, a spokesman said.

Boeing aims to sell 80 jets directly to Iran Air as part of a proposed deal valued at up to $17.6 billion. It would be among the largest by a U.S. firm since the sanctions were loosened. Boeing said Wednesday it remained in talks with Iran Air about an existing tentative deal on plane purchases.

Boeing's sales team has visited Iran several times this year, though no senior executives have been in attendance.

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. Export credit agencies backing Airbus signaled they are ready to support a deal with Iran.

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 16:12 ET (20:12 GMT)

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