Boeing Can Sell Planes To Iran, But Does Iran Want Them?

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An Iran Air Boeing 747 passenger plane on the tarmac of Mehrabad Airport in Tehran in 2013. Iran bought most of its planes from Boeing before the 1979 Islamic Revolution. The country now has one of the oldest airline fleets in the world. With sanctions lifted, Boeing can once again sell planes to Iran, but the country recently announced a major deal with Airbus. (AFP/Getty Images)
An Iran Air Boeing 747 passenger plane on the tarmac of Mehrabad Airport in Tehran in 2013. Iran bought most of its planes from Boeing before the 1979 Islamic Revolution. The country now has one of the oldest airline fleets in the world. With sanctions lifted, Boeing can once again sell planes to Iran, but the country recently announced a major deal with Airbus. (AFP/Getty Images)

Iran and Boeing go way back. Boeing was the largest supplier of civilian aircraft to Iran before the country's 1979 Islamic revolution. And despite the fraught relations between the U.S. and Iran since then, Iran has kept flying those planes for decades.

As part of the recent Iranian nuclear deal and the lifting of sanctions, Boeing is once again permitted to sell planes to the Islamic Republic. And Iran desperately wants to start replacing its fleet of aging, worn-out commercial aircraft.

But don't expect any deals anytime soon. Just last week, Iran announced preliminary plans to buy 118 planes from France-based Airbus in a deal worth roughly $27 billion.

Boeing, which is based in Chicago, says it isn't rushing to get back into Iran, says spokesman Gordon Johndroe.

"There are many steps that need to be taken should we decide to sell airplanes to approved Iranian airlines. But for now, we continue to assess the situation," he says.

Rescue workers look through the wreckage of an Iran Air Boeing 727 plane that crashed in northwest Iran as it was making an emergency landing in 2011. More than 70 of the 106 on board were killed. Iran's aging airline fleet has had a poor safety record.
Rescue workers look through the wreckage of an Iran Air Boeing 727 plane that crashed in northwest Iran as it was making an emergency landing in 2011. More than 70 of the 106 on board were killed. Iran's aging airline fleet has had a poor safety record.

Dr. Adam Pilarski, vice president of Avitas, an aviation consultancy group, says Boeing is wise to be cautious in any deal with Iran.

The nuclear sanctions have been lifted, and the sale of commercial aircraft are allowed. But the U.S. is keeping some sanctions against Iran in place that are linked to human rights issues and terrrorism. Pilarski says Boeing would need to clarify a number of things before working out a deal.

"There are various complicated legal issues that many lawyers have to go through," he says, adding "For example, could any of the technology on the new aircraft be used for military purposes?"

Boeing and Airbus compete fiercely around the world for airplane sales. But Pilarski says there's no need for Boeing to panic about getting beat to the punch in Iran. He says it's normal for a country buying aircraft to play two companies off each other for better price leverage in negotiations. Pilarski says it's likely Boeing is already quietly exploring a deal.

"I would be very surprised if Iran only buys airplanes from Airbus and none from Boeing. That would be a huge surprise to me. It doesn't make sense," he says.

Ardavan Amir-Aslani, a French-Iranian lawyer who is negotiating deals with Tehran for French companies says the Airbus deal isn't set in stone.

"The agreements that have been signed are not definite, final documents," he says.

Amir-Aslani says financing the Airbus deal is a challenge because it has to be done without using the U.S. financial system. U.S. banks are still barred from doing business in Iran, and most foreign banks have partnerships with U.S. banks. Amir-Aslani says there's a difference between announcing a deal with Airbus and having an actual contract in hand.

"We're talking about memorandums of understanding or letters of intent. So the actual implementation of these contracts is going to happen over time," he says.

Iran may have other more pressing needs for its money - from rebuilding its infrastructure to modernizing its oilfields. Richard Aboulafia, an analyst with the Teal Group, an aerospace consultancy, says Iran may decide to lease new planes, not buy them. He says losing a deal wouldn't affect Boeing too much.

"I don't think this matters a whole heck of a lot. I mean you're talking about an industry that pumps out 1,400 jets a year," he says.

Even if it doesn't sell planes, Boeing could make a lot of money another way. Many of those old jets that Iran is still flying are in desperate need of Boeing parts and maintenance, Aboulafia says

Copyright 2016 NPR. To see more, visit http://www.npr.org/.

Copyright NPR. View this article on npr.org.

Transcript

MICHEL MARTIN, HOST:

The recent nuclear deal with Iran eases sanctions that had made it more difficult for the country to replace its worn out commercial aircraft. Now, the shopping for new jets has begun. Iran has announced it will spend billions to buy 118 planes from France-based Airbus. Airbus' biggest - big U.S. rival Boeing is widely expected to try to get in on the action but just not yet. NPR's Jackie Northam reports.

JACKIE NORTHAM, BYLINE: The agreement reached between Airbus and Iran is worth roughly $27 billion and includes A380s, the world's largest passenger jet. This is the first step to Iran modernizing its fleet of worn out, even unsafe planes. And it has money to spend on it now that most sanctions have been lifted. It's an opportunity for Boeing to sell its aircraft. But the company isn't rushing into it, says spokesman Gordon Johndroe, reading a prepared statement.

GORDON JOHNDROE: There are many steps that need to be taken should we decide to sell airplanes to approved Iranian airlines. But for now, we continue to assess the situation.

NORTHAM: Adam Pilarski, vice president of AVITAS, an aviation consultancy group, says Boeing is wise to be cautious in any deal with Iran. The nuclear sanctions have been lifted and the sale of commercial aircraft are allowed. But the U.S. is keeping some sanctions against Iran in place. Pilarski says Boeing would need to clarify a number of things before working out a deal.

ADAM PILARSKI: There are various complicated legal issues that many lawyers will have to go through. For example, could any of the technology on the new aircraft be used for military purposes?

NORTHAM: Boeing and Airbus compete fiercely around the world for airplane sales. But Pilarski says there's no need for Boeing to panic about getting beat to the punch in Iran. He says it's normal for a country buying aircraft to play two companies off each other for better price leverage in negotiations. And Pilarski says it's likely Boeing is already quietly exploring a deal.

PILARSKI: I would be very surprised if Iran only buys airplanes from Airbus and none from Boeing. That would be a huge surprise to me. It doesn't make sense.

NORTHAM: And the Airbus deal isn't set in stone.

ARDAVAN AMIR-ASLANI: The agreements that have been signed are not definitive, final documents.

NORTHAM: Ardavan Amir-Aslani is a French-Iranian lawyer who's negotiating deals with Tehran for French companies. He says financing the Airbus deal is a challenge because it has to be done somehow without using the U.S. financial systems, banned by sanctions still on the books. Amir-Aslani says there's a difference between announcing a deal with Airbus and having an actual contract in hand.

AMIR-ASLANI: We're talking about memorandums of understanding or letters of intent. So the actual implementation of these contracts is going to happen over time.

NORTHAM: And Iran may have other more pressing needs for its money - from rebuilding its infrastructure to modernizing its oilfields. Richard Aboulafia, an analyst with the Teal Group, an aerospace consultancy, says Iran may decide to lease new plans, not buy them. He says losing a deal wouldn't affect Boeing too much.

RICHARD ABOULAFIA: I don't think this matters a whole heck of a lot. I mean, you're talking about an industry that pumps out 1,400 jets a year.

NORTHAM: Even if it doesn't sell planes, Boeing could make a lot of money another way. Many of those old jets that Iran has been flying are Boeings that were bought before the Iranian Revolution in 1979. Aboulafia says they're in desperate need of Boeing parts and maintenance. Jackie Northam, NPR News. Transcript provided by NPR, Copyright NPR.