Regional

Iran expects word from Airbus on deal soon

An IranAir Airbus A320 aircraft parks after landing at Belgrade's Nikola Tesla Airport, Serbia, March 13, 2018. REUTERS/Marko Djurica

ANKARA/PARIS: Iran expects to hear from Airbus in the coming days about the fate of an order for 100 planes that looks to have been wrecked by the United States’ decision to reinstate sanctions on the Islamic Republic. The deal, potentially worth about $18 billion to $20 billion at list prices, was agreed in December 2016. But so far only three planes have been delivered, with industry sources blaming delays on the wariness of banks to finance business with Tehran.

The U.S. administration appeared to deal a fatal blow to the transaction Tuesday when President Donald Trump pulled Washington out of the 2015 nuclear accord with Iran and said it would reimpose sanctions on the Islamic Republic.

Washington said at the time that it would also revoke the export licenses needed by planemakers to sell commercial planes to Iran. Although Airbus is a European firm, its aircraft use U.S. components and technology.

“Airbus will announce its decision in the coming days,” senior adviser to Iran’s Roads and Urban Development Minister Asghar Fakhrieh-Kashan told the semi-official Fars news agency.

“No down payment has been made by Iran to the planemakers for future deliveries,” he added.

Airbus declined to comment.

Washington’s decision to reinstate sanctions signals the collapse of about $38 billion in plane deals between Tehran and Western firms, with Airbus facing greater risks than its U.S. rival Boeing, people involved in the deals say.

IranAir, the national flag carrier, had ordered 200 passenger aircraft, with 100 from Airbus, 80 from Boeing and 20 from ATR. All the deals are dependent on U.S. licenses because of the heavy use of American parts in the planes.

Iran has so far imported only about 11 aircraft, three from Airbus and eight from Franco-Italian turboprop maker ATR.

“During the talks with Airbus and Boeing we did not consider any possibility of such exit from the deal and it was not mentioned in the contracts,” Fakhrieh-Kashan, a former deputy minister who negotiated the contracts, told Fars.

Other Iranian airlines had also made provisional plane orders, but had yet to sign firm contracts.

Industry sources say Airbus is resigned to losing Iran’s business for the time being, but will carefully consider its options before cancelling it from its official order book, as doing so could tip it into negative net orders – orders minus cancellations – for the year.

But the loss of U.S. export permits and confirmation that Iran has not paid a deposit, as previously reported by Reuters, could force Airbus to tell investors the deal cannot go through.

Fakhrieh-Kashan raised the prospect that some deliveries could, however, still go ahead in a 90- to 180-day window allowed for winding down current business under the new U.S. sanctions framework.

“We are in contact with Airbus and they are exploring all possibilities that might exist to take advantage of the limited time in front of us,” he told Reuters by telephone.

“It all depends on European government support and policies,” Fakhrieh-Kashan added.

The other major signatories of the 2015 Iran nuclear deal, including European countries, China and Russia, have said they will stand by the agreement. However, Germany, France and Britain, in a bid to bring Washington back into the deal, want talks to be held with Tehran in a broader format covering Iran’s ballistic missile program, its nuclear activities beyond 2025 and its involvement in conflicts in the Middle East.

Under the nuclear deal, Iran curbed its nuclear program in return for lifting most international non-nuclear sanctions imposed on the country that crippled its economy for years. Most sanctions were lifted in 2016.

 
A version of this article appeared in the print edition of The Daily Star on May 12, 2018, on page 4.

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