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Business

Boeing Signs $3B Deal with Iran Airline, a First Under Trump

The new Boeing deal was made possible by the nuclear agreement reached between Iran and world powers

In this March 7, 2017 file photo, the first of the large Boeing 737 MAX 9 models, Boeing's newest commercial airplane, sits outside its production plant, in Renton, Washington, photo: AP/Elaine Thompson
9 months ago

TEHRAN, Iran – Boeing Co. has signed a $3 billion deal with an Iranian airline for 30 new aircraft, officials said Tuesday, in the first major sale by a U.S. company in the Islamic Republic since the Trump administration imposed new sanctions against Tehran.

The deal for the 30 737 MAX aircraft, which includes an option for another 30, could force Trump to choose between two major campaign promises: Taking a harder line against Iran or defending U.S. manufacturing jobs.

The new agreement comes on top of the $16.6 billion sale Boeing previously made in Iran following the landmark nuclear deal struck under the Obama administration. President Donald Trump long has criticized the atomic deal, though he toured a Boeing plant in February and touted the firm’s work as proof of a coming U.S. manufacturing renaissance.

“On the one hand, there’s the attraction of jobs and export orders for American goods. On the other hand, of course, they were elected partly on the promise of getting tough on Iran,” said Richard Aboulafia, an aircraft analyst and vice president of analysis at the Virginia-based Teal Group. “They’ll have to make tough decisions.”

Chicago-based Boeing struck the deal with Iran’s Aseman Airlines, a firm owned by Iran’s civil service pension foundation. Aseman, Iran’s third-largest airline by fleet, flies domestic and international routes.

Aseman spokesman Amir Reza Mostafavi told reporters that the deal came following several round of talks with Boeing over the past year. He said the firms signed the deal March 18 and the first aircraft will be delivered in 2019. Boeing said the first delivery would be in 2022.

The European Union blacklisted Aseman in December because of safety concerns. The airline did not operate flights to European destinations at the time.

Less than a week after that decision, the airline sealed a deal to lease seven planes made by European manufacturer Airbus. Those aircraft are expected to begin arriving next month.

The new Boeing deal was made possible by the nuclear agreement reached between Iran and world powers. Boeing struck a December deal with Iran Air, the country’s flagship carrier, for 80 passenger planes worth $16.6 billion. Iran Air also will lease 29 new Boeing 737s.

In January, Iran Air signed agreements to buy 118 planes from Airbus, estimated to be worth some 22.8 billion euros ($25 billion). Asghar Fakhrieh Kashan, a deputy transportation minister, later said Iran would cut the number of Airbus planes to 112.

Washington granted permission for Boeing and Airbus to make the initial sales in September. Both manufacturers needed the approval of the U.S. Treasury for the deal because at least 10 percent of the airplanes’ components are of U.S. origin. The Treasury similarly would need to approve the latest deal.

Iran’s nuclear deal with world powers, which limits its enrichment of uranium in exchange for the lifting of some international sanctions, specifically allowed for the purchase of aircraft and parts.

Home to 80 million people, Iran represents one of the last untapped aviation markets in the world. However, Western analysts are skeptical that there is demand for so many jets or available financing for deals worth billions of dollars.

Another wild card is U.S. politics. Trump has threatened to renegotiate terms of the Iran deal, while some lawmakers have suggested putting new sanctions in place and criticized Boeing for selling aircraft to Iran. In February, the Trump administration said it was putting Iran “on notice” when it sanctioned more than two dozen people and companies in retaliation for a ballistic missile test.

Tehran-based analyst Saeed Leilaz said he believed the deal would encourage other Western companies to enter Iran despite the political rhetoric.

“This will boost the previous agreement between Boeing and Iran Air while indicating the Trump administration is willing to continue to work with Iran despite various differences on the missile program and Iran’s regional role,” Leilaz said.

Boeing seemed to be addressing Trump in its statement on the sale.

“According to the U.S. Department of Commerce, an aerospace sale of this magnitude creates or sustains approximately 18,000 jobs in the United States,” it said. “Boeing continues 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 are contingent upon U.S. government approval.”


Boeing lists 3,621 unfilled orders for the 737 MAX aircraft, a single-aisle plane which undergoes final assembly in Renton, Washington. The first is expected to be delivered to Norwegian Air Shuttle in May.

Aboulafia, the aviation analyst, said ultimately the sales wouldn’t change Iran’s status in the Gulf, already home to three major long-haul carriers, or greatly affect Boeing’s bottom line.

“This is not a market that means a great deal anymore,” he said. “It attracts headlines — and it has all kinds of political headaches and conflicts associated with it — but Iran as a world hub of aviation isn’t what it was.”

NASSER KARIMI
JON GAMBREL

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