Transport

Iran Air-Boeing in USD16.6 billion deal

Iran Air-Boeing Deal

The deal has been finalized just weeks before the inauguration of President-elect Donald Trump.

Yet it is not even the largest acquisition of jets made by Iran Air this year; in January they finalized an agreement with Airbus to purchase 118 aircraft worth a total of USD27 billion. Shortly after the implementation of the JCPOA, the US lifted sanctions on Iranian civil aviation, allowing Iran Air to acquire new jets from foreign manufacturers.

“The modernization of our fleet is an indispensable demand from the airline’s strategic plan to lower costs, to enhance safety and comfort, and to have a remarkable share in the competitive market,” said the Chairman & Managing Director of Iran Air, Farhad Parvaresh, in an interview published in The Business Year: Iran 2016.

Parvaresh also noted that while sanctions were in place over the past seven years, Iran Air could not purchase any aircraft nor refuel in European airports, two factors that severely limited the firm’s ability to operate. However, Iran Air is now implementing a strategy to expand its business, modernizing its outdated fleet to boost its presence in the highly competitive air transportation market in the Middle East, filled with players such as Emirates, Turkish Airlines, and Qatar Airways.

“We have the possibility to be a point of transit between Europe and Asia, as Tehran is a natural stopover point on that route,” added Parvaresh. Nevertheless, the Chairman & Managing Director of Iran Air believes that the country needs to improve its infrastructure first and foremost if it wishes to fulfill its wish to become a hub between Europe and Asia.

The company was able to strike the agreements with Airbus and Boeing after the US Organization of Foreign Assets Control (OFAC) issued licenses to authorize the deals. Parvaresh confirmed that the airline is also negotiating with other manufacturers like Bombardier from Canada and the Brazilian manufacturer Embraer, although it must first wait for an OFAC license.

Iran Air’s expansion plans foresee the acquisition of 230 aircraft to upgrade its current fleet, which would make it larger than Abu Dhabi-based Etihad Airways. The first aircraft in this order are to be delivered in 2018 and will generate around 100,000 new US jobs, according to a Boeing press release.

The deal has been finalized just weeks before the inauguration of US President-elect Donald Trump, who has lambasted the nuclear agreement with Iran and publicly criticized Boeing on Twitter about the cost of the new Air Force One, currently in production.

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