On Tuesday, Boeing Co. (NYSE: BA) announced 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 in Tehran were eased.
The proposed agreement comes after months of talks between Boeing and Iran Air. Details of the potential transaction have yet to be disclosed by Boeing, but Iranian Transport Minister Abbas Akhoundi publicized on television ? that the pact could have a value of up to $25 billion.
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. completing an agreement with Iran Air could take months amid continued uncertainty from lenders about financing deals with Iran and the need for the U.S. government to sign off on any sale. The transaction would include Boeing 777-300ER long-range jets, a plane Boeing has been struggling to sell to sustain production until a replacement is ready toward the end of the decade.
The potential plane sale isn’t without critics.
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.
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.
In January, Airbus Group SE announced an agreement with Iran for 118 new jets, underscoring Iran’s interest in restoring commercial ties with Europe, as well as the country’s urgent need for new commercial aircraft. The deal, which had 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.
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 of the agreement, which would include Iran’s purchase of 12 A380 superjumbos, which could be completed this year.
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.