US exit of Iran deal threatens billions of dollars in aviation
The President of the United States Donald Trump announced on May 8, 2018 his intention to pull out from Iranian nuclear deal and to restore sanctions on Iran. The bans about to be enforced again concern the trade of oil, metal… and aviation. The decision will affect many companies of the aviation industry on both sides of the Atlantic, countering hundreds of aircraft sales - worth billions of dollars - to Iran.
Threat to hundreds of aircraft sales
Following the 2015 agreement, the U.S. Treasure Department had delivered specific licenses on September 2016 to both Boeing and Airbus, allowing them to sell commercial planes to Iran.
On December 11, 2016, Boeing agreed to sell 80 aircraft to Iran. This included 50 B-737 and 30 B-777. The delivery was to be made in the next 10 years, with the first planes landing in Iran in 2018. The total contract of about $16.6 billion was expected to secure up to 100,000 jobs in the United States according to the New York Times. The U.S. based manufacturer also secured a $3 billion contract with Iranian company Aseman Airlines for thirty Boeing 737 MAXs that were to be delivered between 2022 and 2024.
A few days later, on December 22, 2016, its European rival Airbus also received a firm order from Iran Air for 100 aircraft: 46 A320, 38 A330 and 16 A350XWB. Two A330-200s and an A321 were already delivered in 2017. The total catalogue price of those aircraft was estimated at $10 billion maximum.
Another contract was eventually signed between Iran Air and the French Airbus and Italian Leonardo joint venture, ATR, for 20 ATR 72-600s, for a price of $536 million, with an option to double the number. The deliveries started in April 2017 and were supposed to finish in 2018.
The objective for the national carrier Iran Air was to modernize its aging fleet. Several aircraft of the company are on the EU blacklist, and those still allowed in European airports are regularly inspected when parked. The oldest Airbus still in passenger activity is part of that fleet: the Airbus A300-B2 EP-IBS is more than 38 years old.
Soon after Donald Trump’s announcement, the U.S. Treasury Department said that the licenses obtained by Airbus and Boeing to sell passenger jets to Iran would be revoked. The companies have 90 days to comply with the new legislation, a period after which they will not be allowed to export commercial aircraft to Iran, nor will they be able to conclude deals with Iranian companies.
Boeing immediately reacted, and declared that it would comply with the change of legislation. “As we have throughout this process, we’ll continue to follow the U.S. government’s lead,” said Boeing’s spokesperson Gordon Johndroe in a press conference.
The answer was not as straightforward for Airbus. “We’re carefully analyzing the announcement and will be evaluating next steps consistent with our internal policies and in full compliance with sanctions and export control regulations,” said Rainer Ohler, communications chief of the European plane maker. “This will take some time.”
However, as all of ATR and Airbus aircraft use parts made by U.S.-based companies and even owns an assembly line in Mobile, Alabama, it seems highly unlikely that its deal with Iran Air will hold.
It is not yet known if the contract between Russian United Aircraft Corporation and two Iranian airlines, Aseman Airlines and Iran Air Tours (the charter subsidiary of Iran Air) will be affected, as some parts of the SSJ100R avionics are produced by U.S. companies.
In 2015, the U.S. president of the time Barack Obama reached an agreement with the Iranian regime after years of negotiations: Iran would give up its nuclear program in exchange of a progressive lift of the international sanctions affecting its economy. The agreement involved Iran and the 5+1 group (the United States, Russia, France, Britain, China, all members of the UN Security Council, plus Germany). But as he promised throughout presidential campaign, Trump withdrew from the agreement, judging it as too indulgent vis-à-vis Iran - a country, described by Trump as the main sponsor of international terrorism.