Tuesday, February 16, 2016

Iran Says Laggard Boeing Can Still Win Orders After Airbus Deal

Iran Air said it’s open to buying aircraft from Boeing Co. even after ordering 118 jetliners worth $27 billion from competing plane-maker Airbus Group SE as soon as international sanctions were removed last month.

Boeing is “lagging behind a bit” and might have acted faster given that the U.S. Treasury, which plays a key role in policing trade barriers, could have granted an export license via its Office of Foreign Asset Control, Iran Air Chief Executive Officer Farhad Parvaresh said in an interview.

“We always thought the 737 for the domestic market is a good option, but they have a rival with the A320,” Parvaresh said at an aviation conference in Tehran. “We just signed a big agreement on that, but this doesn’t prevent us from also signing an agreement with Boeing on some of their products.”

The state carrier revealed its Airbus deal on the day sanctions imposed over Iran’s nuclear program were lifted, with President Hassan Rouhani confirming the order for 45 single-aisle A320s and 73 A330, A350 and A380 wide-bodies on a subsequent visit to Paris. Boeing has made no announcement and was absent from a January aviation gathering in Tehran that its European rival attended.

Barriers Remain

To be sure, obstacles remain to American businesses doing business with Iran, with the U.S. agreeing to remove curbs primarily for foreign players. While commercial aviation companies were the only entities granted special authorizations under the nuclear deal, the U.S. retains discretion over sales by requiring them to file for a transaction-specific license. Boeing didn’t immediately respond to a request for comment.

Iran Air, which currently serves 27 domestic and 29 international routes, is likely to need more aircraft as it rolls out a 10-year plan aimed at moving from survival mode to expansion. The company plans to tap a national market of 80 million people and global Persian diaspora of about 10 million, as well as the anticipated influx in business visitors.

Iran Air, whose aging fleet numbers about 40 planes including Boeing 747s, A320s and discontinued A300s, A310s and Fokker NV 100s, is looking at adding routes to markets including Canada, Australia and Singapore once it gets the wide-bodies to make those flights, Parvaresh said. It also wants to reinstate destinations such as Tokyo and Seoul that were halted under sanctions.

Airport Ambitions

“For now the 747 is not suitable, but if we get the A330 and A350 we can run those itineraries,” he said. “We need the planes, but the potential is there.”

Iran Air aims to eventually list on the Tehran stock exchange, though must be in a “suitable condition” first and has set no timescale, Parvaresh said.

The modernization of Iran’s aviation industry also requires the purchase of 160 regional aircraft and the upgrade of dozens of airports, Iran Civil Aviation Organization CEO Ali Abedzadeh said in an interview at the conference. About 20 of 80 bases are inoperative and standards generally must improve, he said.

Iran has ambitions to establish Imam Khomeini airport as a regional hub and is in talks with France’s Bouygues SA and Aeroports de Paris on initial spending of $2.5 billion, Abedzadeh said. Tehran’s secondary Mehrabad base and terminals in Mashhad, Isfahan and Tabriz are also a priority, he said.

(Ladane Nasseri - Bloomberg Business News)

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