Farnborough Air Show

U.S. Scuppers Aircraft Deliveries to Iran as Euro Appeal Fails

 - July 16, 2018, 5:06 AM

The U.S. government has rejected an appeal by the European Union (EU) to allow some exemptions to economic sanctions against Iran that the Trump Administration imposed in May when it unilaterally pulled out of the 2015 international agreement on Iran’s nuclear programme. The decision, confirmed in a letter signed by U.S. Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin, blocks efforts by European airframers ATR and Airbus to deliver new airliners ordered by Iran Air after earlier sanctions were lifted.

On July 2, ATR applied for an export license from the U.S. Treasury Department’s Office of Foreign Assets Control to allow it to resume deliveries of 20 ATR72-600s ordered in 2016. The manufacturer had delivered eight of the twin-turboprop regional airliners before the U.S. reimposed sanctions.

Airbus also holds an order from Iran Air for 118 aircraft, including 73 widebodies and 45 narrowbodies. The contract, signed by then French President François Hollande and Iranian President Hassan Rouhani in January 2016, also included pilot and maintenance training, as well as support services. To date, only three of the aircraft covered by the deal have been delivered to Iran.

Boeing is also missing out on around $3 billion worth of business, with Iran Aseman Airlines' order for thirty 737 Max airliners now scuppered by President Donald Trump’s policy reversal. Russia, whose president Vladimir Putin held talks with Trump in Helsinki on Monday, has made it clear it will be glad to supply Iran’s airlines with alternative equipment such as the Superjet SJ100 narrowbody.

In the U.S. government letter, released on the eve of this week’s Farnborough Air Show, Secretary of State Mike Pompeo said the appeal had been rejected because the U.S. is seeking to exert maximum pressure on Iran. He indicated that the U.S. might grant exemptions to the sanctions if they are deemed to benefit U.S. national security.

Over the weekend, President Trump said he considers the European Union to be a “foe” of the U.S. In recent days, he has clashed with European leaders over issues such as trade tariffs and NATO-related defense spending.

Foreign companies face significant financial penalties if they are found to have breached U.S. sanctions on Iran. Airbus's manufacturing facilities in the U.S. add extra potential leverage for the U.S. government over the European aircraft manufacturer.