U.S. Gives Boeing, Airbus Go-Ahead to Send Airliners to Iran -- 4th Update
September 21 2016 - 04:53PM
Dow Jones News
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.
Rep. Peter J. Roskam (R., Ill.), a critic of Iran plane deals,
said, "There is a still a long way to go and many more hurdles to
overcome before Iran can actually take delivery of these planes --
and thankfully Congress is committed to making the process as
difficult and expensive as possible."
Other obstacles remain, 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 16:38 ET (20:38 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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