Dubai Airshow

Iran’s Progress with Major Orders Slows

 - November 9, 2017, 12:00 PM

With no improvement in relations between Iran and the Gulf Cooperation Council (GCC) in the wake of the Joint Comprehensive Plan of Action (JCPOA) that came into force in January 2016, all eyes are on Iran’s recent aircraft orders, as success or failure with the world’s leading OEMs will serve to clarify its wider geopolitical situation. Existing tensions have increased further, due to the boycott of Qatar, which has seen the hitherto unthinkable scenario of Iran getting into bed with what could now become an erstwhile GCC member.

Iran's Islamic Republic has remained defiant throughout the year, using its orders, particularly with Boeing, to drive a wedge between the U.S. Trump administration and the OEM. However, from its point of view, progress with deals signed last year have been disappointing.

“Due to the fact that contracts to purchase new airplanes have been signed internationally, the U.S. recent vote as regards prohibiting sales of airplanes to Iran had no effect on the implementation of the deal,” the Islamic Republic News Agency (IRNA) reported September 15.

“All the contracts...sealed based on [the] Iran nuclear deal…have been approved by the United Nations,” chief executive of Iran Civil Aviation Organization, Ali Abedzadeh, told IRNA.

Last December, Boeing and Iran Air issued a statement announcing an 80-aircraft agreement that includes "fifty 737 Max 8s, fifteen 777-300ERs and fifteen 777-9s, valued at $16.6 billion at list prices...Based on its Memorandum of Agreement (MOA) with Iran Air announced in June, the contract was reached within the terms of the U.S. Government license issued to Boeing in September.”

A Boeing spokesman cited news reports, including one published May 1 by The Seattle Times, quoting CEO Dennis Muilenburg, as saying that delivery of airplanes to Iran Air in 2018 “remains on track.”

“The $16.6 billion deal with Iran Air and a separate $3 billion agreement with Iran Aseman Airlines bring two of President Donald Trump’s initiatives into conflict: his campaign vows to ‘get tough’ on Iran and his promise to bolster U.S. exports supporting thousands of manufacturing jobs,” the report said.

Deliveries Begin

On Dec. 22, 2016, Iran Air and Airbus signed a firm contract for 100 aircraft, fruit of an initial commitment signed in Paris in January 2016. The agreement—signed by Farhad Parvaresh, Iran Air chairman and CEO, and Fabrice Bregier, Airbus president and CEO—covers 46 A320-family, 38 A330-family and 16 A350 XWB aircraft. Deliveries were to begin in early 2017.

When contacted by AIN, Boeing spokesman Marc Sklar reiterated earlier statements. “We continue to follow the U.S. government’s lead in all our dealings with approved Iranian airlines‎ and will remain in close touch with U.S. regulators for any additional guidance.” Airbus did not respond to AIN’s request for comment.

ATR spokesman David Vargas verified an IRNA report issued September 27 and saying that two ATR turboprops would be delivered to Iran on September 28, following Iran receiving four ATR aircraft. “We signed a deal for 20 ATR 72-600s plus 20 options with Iran Air in 2017. Deliveries have already started,” Vargas told AIN.

“We definitely understand there is a huge potential for modern ATRs to renew and expand regional air services across the country," he added. "There are some 30 regional aircraft in Iran, and their average age is 20 years. We understand there may be a potential for some 100 [new] regional aircraft within the next 10 years, for fleet renewal and expansion of regional air connectivity in Iran’s new era.”​​

“It is important to follow the advice of military and security professionals. For an awful lot of them in the U.S. and Israel, the deal is the worst—not counting all the other options. My personal view is to stick with it,” said Richard Aboulafia, vice president analysis with Teal Group.

“You also have some people opposed to it for reasons that appear to me to be absolute nonsense. In terms of brand new jetliners being used for hauling troops [or weapons], if that were true, that would be very interesting. The idea that Iran is paying top dollar for brand new jets, and then using them for these purposes, is so foolish as to stretch the imagination.”

He said the fact that Iran is not a signatory to the Cape Town Convention complicates its efforts to finance new deals, and added that the drive to become so might be impeded by domestic politics. He also said that Iranian interest in “10 to 20” existing Boeing 777s would not help bridge production through to the 777X.

Aboulafia said recent talk of a new Boeing 797 was interesting. “Authorization is to take place from an airline advisory group. It is a mid-market, twin-aisle, all-composite machine, capable of flying between 220 and 250 passengers some 5,000 nautical miles,” he said.

“There is a good chance Boeing will use the Dubai Airshow as an opportunity to market the concept. It could happen this year at Dubai, or early next year, with industrial launch by Farnborough or sometime in 2018. Entry into service would probably take place in 2025, with first flight in 2023-24 at the latest,” suggested the analyst.