Undelivered Iran Air ATRs Up for Sale

 - September 10, 2018, 11:52 AM

ATR has begun the process of “reallocating” seven undelivered ATR 72-600s originally reserved for Iran Air after U.S. sanctions that came back into force on August 7 effectively prevented any further deliveries to the Islamic Republic. Implemented following a 90-day “wind down” period from the date U.S. President Donald Trump signed an order to re-impose sanctions, the prohibitions bar any transaction with Iran or Iranian companies involving commercial aircraft carrying 10 percent U.S. content. They also prevent the sale of parts and services to Iranian airlines.

The new sanctions effectively reversed the Obama Administration’s January 2016 settlement with Iran known as the Joint Comprehensive Plan of Action (JCPOA), which lifted earlier sanctions on the sale of commercial airplanes containing a given proportion of U.S.-made content to Iran in return for the Islamic Republic’s agreement to curb its nuclear ambitions.

According to current regulations, an item made outside the U.S. that incorporates controlled U.S.-origin content exceeding the applicable de minimis percentage for a particular country stands subject to those regulations. The de minimis proportion generally amounts to 25 percent, but the percentage lowers to 10 percent when applied to what the U.S. deems “terrorist supporting countries” such as Iran, North Korea, Sudan, and Syria.

Early this summer ATR applied for a new export license from the U.S. Treasury Department’s Office of Foreign Assets Control to allow it to resume deliveries of 20 ATR 72-600s ordered by Iran Air in 2016 pending an exemption requested by the European Union on behalf of both ATR and Airbus. However, the U.S. government rejected the EU appeal in late July.

Airbus, which sold a mix of 98 A320-family, A330, and A350 XWB jets to Iran Air in December 2016, delivered its first A321 in January last year. By the time the U.S. announced the new sanctions, Airbus delivered another six A320s and two leased A330-200s. Boeing, for its part, inked a “definitive agreement” covering fifty 737 Max 8s, fifteen 777-300ERs, and fifteen 777-9s valued at $16.6 billion at list prices with Iran Air in December 2016, and another for 30 Max narrowbodies with Iran Aseman Airlines four months later. Although it too secured an OFAC license to start deliveries, it never converted the agreements to firm orders as questions persisted over whether the Trump Administration would exercise its right to amend, modify, or revoke the license.