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 agreement, which drew swift opposition from those
concerned about business dealings with Iran, comes after months of
talks between Boeing and Iran Air.
"Boeing confirms the signing of a Memorandum of Agreement (MOA)
with Iran Air, expressing the airline's intent to purchase Boeing
commercial passenger airplanes," said the world's largest plane
maker.
Iran's airlines have indicated a dire need for both medium-haul
jets such as Boeing's single-aisle 737 and long-haul aircraft like
its 777 and 787 Dreamliners.
State-owned Iran Air on Monday said it planned to introduce 737
and 777 planes pending approval from its government and the U.S.
The planes, at least partly acquired through finance leases, would
include Boeing's newest long-haul plane, the 777-9, an airline
official said. The model isn't due to enter service until the turn
of the decade.
Iranian Transport Minister Abbas Akhoundi told state television
on Tuesday that the pact could have a value of up to $25 billion,
according to the Associated Press, roughly on par with a similar
deal Boeing-rival Airbus Group SE struck with the country in
January.
Completing an agreement with Iran Air could take months amid
uncertainty from lenders about financing deals with Iran and the
need for the U.S. government to sign off on any sale.
The transaction also would include Boeing 777-300ER long-range
jets, a plane Boeing has been struggling to sell to sustain
production until the replacement 777-9 is ready toward the end of
the decade.
The potential plane sale isn't without critics.
Lawmakers in the House of Representatives Tuesday moved quickly
to raise the cost of any Boeing deal with Iran. One bill, sponsored
by Charles W. Boustany, Jr., (R., La.), would double taxes
companies owe on a deal in which the end user is based in a country
designated by the U.S. as a state sponsor of terrorism, such as
Iran. The proposed legislation also would eliminate the White
House's ability to waive on national security or similar grounds
these provisions.
A second bill, introduced by House Chairman of the Ways &
Means Subcommittee on Oversight Peter Roskam (R., Ill.), would make
it more difficult to raise financing for a sale. "If Boeing goes
through with this deal, the company will forever be associated with
Iran's chief export: radical Islamic terrorism," Mr. Roskam said,
adding that "this bill seeks to prevent Iran from accessing U.S.
dollars in any manner by imposing a 100% excise tax on any
transactions which directly or indirectly enable the Islamic
Republic to make financial transactions in American currency."
The Chicago-based plane maker said, "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."
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."
The U.S. Export-Import Bank, which often provides financial
backing to Boeing deals, has told Congress it wouldn't finance
transactions to Iran because the country has been designated by
Washington a state sponsor of terrorism.
In Washington, the U.S. State Department said Boeing's
announcement was representative of the permissible business
activity envisioned in the nuclear deal between six world powers
and Iran reached last year that took effect in January. State
Department spokesman John Kirby said the tentative agreement to
sell jetliners to Iran is "good for both the economy and public
safety."
An administration official said the U.S. won't stand in the way
of permissible business allowed under the accord and will continue
to meet its commitments so long as Iran meets its nuclear-related
pledges.
Iran's airlines beyond the flag carrier have indicated a dire
need for both medium-haul jets such as Boeing's single-aisle 737
and long-haul aircraft like its 777 and 787 Dreamliners.
The U.S. has maintained sanctions over the sale of planes to
some Iranian carriers due to concerns they are involved in
supporting terrorism. The Iranians deny the charge.
Iran represents an attractive market given the country's large
middle class and hundreds of aging and under-utilized jets
operating there, Randy Tinseth, Boeing Commercial Airplanes vice
president of marketing said in an interview Tuesday. He declined to
discuss specifics of the deal.
Iran still faces challenges introducing new planes, he said,
including neglected infrastructure after years of sanctions.
Iranian officials have acknowledged the country's airports and
ability to repair planes need upgrading. Iran, in recent months,
signed agreements with western companies to help improve its
aviation infrastructure.
Airbus's agreement with Iran for 118 new jets, which has a list
price value of about $27 billion, hasn't been completed because of
worries in the financial community about doing deals in Iran.
Airbus also is 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 agreement, 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 company's Chief Executive Patrick de
Castelbajac said this month. ATR 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 because 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.
Aresu Eqbali in Tehran, Jay Solomon and Felicia Schwartz in
Washington, and Jon Ostrower in Chicago contributed to this
article.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
June 21, 2016 18:08 ET (22:08 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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