Iran ‘expects’ word from Airbus on plane deal soon

Deal thrown into doubt by US sanctions

ANKARA/PARIS, May 12, (RTRS): Iran expects to hear from Airbus in the coming days about the fate of an order for 100 planes that looks to have been wrecked by the United States’ decision to reinstate sanctions on the Islamic Republic.

The deal, potentially worth about $18-20 billion at list prices, was agreed in December 2016. But so far only three planes have been delivered, with industry sources blaming delays on the wariness of banks to finance business with Tehran.

The US administration appeared to deal a fatal blow to the transaction on Tuesday when President Donald Trump pulled Washington out of the 2015 nuclear accord with Iran and said it would reimpose sanctions on the Islamic Republic.

Washington said at the time that it would also revoke the export licences needed by planemakers to sell commercial planes to Iran. Although Airbus is a European firm, its aircraft use US components and technology.

“Airbus will announce its decision in the coming days,” senior adviser to Iran’s Roads and Urban Development Minister Asghar Fakhrieh-Kashan told the semi-official Fars news agency.

“No downpayment has been made by Iran to the planemakers for future deliveries,” he added.

An Airbus spokesman declined to comment.

Washington’s decision to reinstate sanctions signals the collapse of about $38 billion in plane deals between Tehran and Western firms, with Airbus facing greater risks than its US rival Boeing, people involved in the deals say.

IranAir, the national flag carrier, had ordered 200 passenger aircraft, with 100 from Airbus, 80 from Boeing and 20 from ATR. All the deals are dependent on US licences because of the heavy use of American parts in the planes.

Iran has so far imported only about 11 aircraft, three from Airbus and eight from Franco-Italian turboprop maker ATR .

“During the talks with Airbus and Boeing we did not consider any possibility of such exit from the deal and it was not mentioned in the contracts,” Fakhrieh-Kashan, a former deputy minister who negotiated the contracts, told Fars.

Other Iranian airlines had also made provisional plane orders, but had yet to sign firm contracts.

Industry sources say Airbus is resigned to losing Iran’s business for the time being, but will carefully consider its options before cancelling it from its official order book, as doing so could tip it into negative net orders — orders minus cancellations — for the year.

But the loss of US export permits and confirmation that Iran has not paid a deposit, as previously reported by Reuters, could force Airbus to tell investors the deal cannot go through.

Fakhrieh-Kashan raised the prospect that some deliveries could, however, still go ahead in a 90- to 180-day window allowed for winding down current business under the new US sanctions framework.

“We are in contact with Airbus and they are exploring all possibilities that might exist to take advantage of the limited time in front of us,” he told Reuters by telephone.