Boeing, Iran Air Announce Deal Worth $16.6 Billion
Conclusion of firm order could hang on support of incoming U.S. administration
An Iran Air Boeing 747-200 takes off from Hamburg, Germany, in 2005. (Photo: Flickr: Creative Commons (BY-ND) by smitty42)

A definitive agreement between Boeing and Iran Air announced Sunday calls for delivery of fifty 737 Max 8s, fifteen 777-300ERs and fifteen 777-9s valued at $16.6 billion at list prices. But questions surrounding political environment and its potential effect on the deal remain as an incoming U.S. presidential administration openly critical of Barack Obama’s signature nuclear settlement with Iran prepares to take office in January.


Although not yet a firm order, the agreement accompanies for the first time detail of the fleet composition, as well as timing of planned first deliveries.


Even though the agreement complies with the terms of the U.S. government license issued to Boeing in September, Congressional Republicans have pledged to block final approval from the U.S. Treasury Department. In fact, the U.S. House of Representatives in November voted 234 to 174 for a bill prohibiting any U.S. transaction connected with the export of passenger airplanes to Iran. The bill would next need to pass the Senate, which, although Republican controlled, failed to pass an earlier bill this summer that would have blocked sales of commercial aircraft with a certain amount of U.S. content. At the time President Obama vowed to veto any such bill, but during the election campaign President-elect Donald Trump pledged to unilaterally abandon the nuclear deal with Iran when he takes office in January.


Meanwhile, financing of the package would likely require support from the U.S. ExIm Bank, which effectively can’t finance any significant foreign transactions until Congress allows for the election of a third board member. For a year and a half the ExIm Bank has operated with just two board members, one fewer than needed to approve transactions worth more than $10 million.


In a statement issued Sunday, Boeing said that it “coordinated closely” with the U.S. government throughout the process leading up to the sale and that it continues to follow all license requirements as it moves toward implementation of the sales agreement.


“Today’s agreement will support tens of thousands of U.S. jobs directly associated with production and delivery of the 777-300ERs and nearly 100,000 U.S. jobs in the U.S. aerospace value stream for the full course of deliveries,” said Boeing. “The first airplanes under this agreement are scheduled for delivery in 2018.”


Boeing also counts some 13,600 U.S. supplier and vendor partners comprising a supply chain that it says supports more than 1.5 million U.S. jobs.


The Obama Administration's deal with Iran to curb its nuclear ambitions allowed for the lifting of sanctions that until this year prevented any manufacturer from selling airplanes with at least 10 percent U.S. content to airlines in the Islamic Republic. Now, as an incoming administration openly hostile to the deal prepares to assume power in January, Republican politicians have cautioned Obama against taking any action that could compromise Trump’s ability to institute his policies as they relate to Iran.


Last month the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a second license to Airbus for the sale of airliners to Iran. The approval covers a second tranche of airliner sales over which Airbus continues to negotiate with Iran Air. The first license, issued in September, covered “short-term” deliveries of 17 A320s and A330s to Iran Air. This second license addresses the remainder of a contract negotiated in January covering 21 airplanes from the current A320 family, 24 A320neo-family airplanes, 27 of the current A330 family, 18 A330-900s, 16 A350-1000s and 12 A380s.