Friday, 24 November, 2017

More details on the biggest Iran-U.S. deal since 1979

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Boeing will supply 80 airplanes to Iran Air over the next 10 years in a deal valued at $16.6bn (£13.18bn). The American aircraft manufacturer and the flag carrier of Iran announced the agreement on Sunday (11 December).

As per the deal, the American firm will supply 50 737 MAX 8 aircraft, 15 777-300ERs and 15 777-9 to the Iranian carrier. Boeing said that deliveries will commence from 2018.

The American firm added that the move would support thousands of jobs in the US. “Today’s agreement will support tens of thousands of US jobs directly associated with production and delivery of the 777-300ERs and nearly 100,000 US jobs in the US aerospace value stream for the full course of deliveries.

“Boeing and its more than 13,600 US supplier and vendor partners across all 50 states are proud to ensure America continues to lead in global aerospace and to create jobs and opportunities in communities across the nation. Boeing’s US supply chain currently supports more than 1.5 million US jobs.”

The announcement comes at a time when Boeing’s relationship with President-elect Donald Trump seems strained. Trump had suggested last week that Boeing should have its contract for Air Force One cancelled because of high costs. He tweeted: “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!”

When asked if the incoming administration was informed about the Iran deal, which was first announced in June, a Boeing spokesperson declined to comment.

However, in a statement, Boeing said that the deal was reached within the terms of the US government license issued to it in September. “Boeing 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,” it explained.

Nonetheless, unnamed sources as cited by the Wall Street Journal said that the deal could still require approval from the US Treasury, State Department and Congress since one of the parties involved was a state-owned airline. This requirement, they said could lead to potential obstacles for Boeing, should Trump oppose future commercial deals with Iran.

The Boeing contract, the biggest Iran-U.S. deal since the fall of the Shah, also clears a major technical hurdle toward implementing last year’s pact between Iran and world powers to reopen trade in return for curbs on Iran’s nuclear activities.

An Iranian official told Reuters that Boeing deal was subject in part to further agreements on financing, but added that money from the deal would not pass through the U.S. financial system.

Financial sources said Boeing has a financing plan for 15 777-300ER jets, which are expected to be delivered from 2018, but the rest of the financing may still have to be negotiated.

Because of the length of the 10-year deal, some U.S. export licenses may need to be extended during Trump’s administration. The president-elect, who opposes last year’s nuclear sanctions deal with Iran, has also rattled Boeing by sparring with China, which accounts for a fifth of the company’s deliveries.

The Iranian official added that IranAir was also at the “very final stage” of formalizing a deal with Europe’s Airbus, which led Western companies back into Iran with a provisional agreement for 118 planes when Tehran emerged from global sanctions in January.

The Airbus deal, which is expected to involve a first batch of 50-60 jets, should be completed in the next couple of days, the official said.

The first Airbus aircraft are expected to reach Iran in 2017.

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