Boeing Inks In $16.6 Billion Plane Deal with Iran
December 11 2016 - 07:43AM
Dow Jones News
By Robert Wall and Asa Fitch
Boeing Co. completed a $16.6 billion agreement to sell jetliners
to Iran, the first major deal between a U.S. company and the
Islamic Republic since Donald Trump, a critic of closer links with
the country, was elected president.
Plane deals including one by European plane maker Airbus Group
SE have been among the most high-profile transactions completed by
the government in Tehran after western powers in January removed
sanctions on the country in return for it agreeing to constrain its
nuclear program.
The Airbus and Boeing plane deals have been staunchly opposed by
critics of the nuclear accord with Iran. U.S. President-elect
Donald Trump has attacked the Iran deal and threatened to undo
it.
Mr. Trump has named retired Army Gen. Mike Flynn as national
security adviser and Rep. Mike Pompeo (R., Kan.) as Central
Intelligence Agency director. Both have voiced opposition to the
nuclear deal. Lawmakers in the House of Representative also have
sought to block airliner transactions to Iran.
The Boeing deal is valued at $16.6 billion, the Iranian
government said on Sunday. The deal will cover deliveries to flag
carrier Iran Air over the coming decade.
Iran's transport minister Abbas Akhoundi said the Boeing deal
was "the first step for the renovation of the country's aviation
fleet," and would soon be followed by the finalization of its deal
with Airbus, according to Iranian state news agency IRNA.
Boeing, in a sign of how politically sensitive the transaction
is, said on Sunday that it "coordinated closely with the U.S.
government throughout the process leading up to the sale and
continues to follow all license requirements as it moves forward to
implement the sales agreement." The aerospace and defense company
added that the deal would support U.S. jobs.
The contract could put Chicago-based Boeing again in the
crosshairs of the President-elect. Mr. Trump last week fired a
broadside at the world's largest airplane maker over a contract to
develop and build a new fleet of Air Force One presidential planes.
Mr. Trump tweeted the program should be canceled because of its
high cost.
Though the election of President Trump has caused some
uncertainty among companies looking to do business with Iran, some
important projects are moving forward. Royal Dutch Shell PLC on
Wednesday said it had signed an agreement with Iran's state oil
company to explore future ventures.
France oil major Total SA has raised its profile in Iran too,
reaching a $4.8 billion gas-development deal last month.
For Iran Air, replacing planes is a priority. After years of
sanctions, some imposed in the wake of the Iranian revolution in
1979. the carrier operates some of the world's oldest
airliners.
The Boeing order would cover 50 of 737 MAX single-aisle planes.
It would include 15 777X long-haul jetliners, Boeing's newest
jetliner still in development, plus an equal number of the current
version of the twin-engine plane.
The U.S. Department of the Treasury's Office of Foreign Assets
Control rules had to approve the license for Boeing and Airbus to
sell planes to Iran. It gave the green light in September.
Some Iranian airlines remain under sanction because of U.S.
allegations they have links to terrorist activities and Iran's
weapons program.
Airbus in January agreed to sell 118 planes to Iran Air in a
deal valued at around $25 billion at list price, though buyers
typically get discounts. Airbus Sunday said it would not comment on
talks with potential customers.
Write to Robert Wall at robert.wall@wsj.com and Asa Fitch at
asa.fitch@wsj.com
(END) Dow Jones Newswires
December 11, 2016 07:28 ET (12:28 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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