Iran To Sue ATR Over Undelivered Airplanes

 - September 12, 2018, 3:12 PM

The Iranian government plans to file a lawsuit against ATR for breach of its contract to deliver all of the 20 ATR 72-600s ordered by Iran Air, Iran’s state-controlled Mehr News Agency reported Wednesday, quoting the head of the Iranian parliament’s Civil Commission, Mohammadreza Rezaei-Kouchi. ATR, which last month delivered the last of 13 airplanes now in Iran Air’s possession, recently began the process of “reallocating” the seven undelivered airplanes 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.

However, Tehran has accused ATR of unnecessarily yielding to political pressure from the U.S. “This company is obliged to either comply with its remaining commitments or pay compensations to Iran,” said Rezaei-Kouchi.

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 the Iran Air airplanes 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. Tehran has not yet announced plans to sue Airbus for its failure to deliver the balance of its airplanes to Iran Air.

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.