Iran 'reaches deal' to buy 100 new Boeing planes

Iran 'reaches deal' to buy 100 new Boeing planes
2 min read
19 June, 2016
The Islamic Republic reached an agreement with American aerospace giant Boeing to purchase 100 aircraft to renew its ageing fleet.
IranAir signed deals to buy 200 planes from three Western manufacturers since mid-January [Getty]

Iran has reached an arrangement with American aerospace giant Boeing to purchase 100 aircrafts to renew its ageing fleet, Iranian officials said on Sunday.

The Islamic Republic ordered about 200 planes from three Western manufacturers since mid-January, when economic sanctions were lifted following a deal on Tehran's nuclear programme.

The deal with Boeing, potentially worth billions, will mark the first major entry of an American company into the Islamic Republic, but is yet to be approved by the US government.

"Both sides, Iran and Boeing, have reached a written agreement for buying Boeing airplanes," Ali Abedzadeh, head of Iran's civil aviation authority said in remarks published by the daily Iran newspaper.

But the deal remains contingent on US Treasury permission, Abedzadeh added.

The initial accord may be completed within a month, Deputy Transport Minister Asghar Fakhrieh Kashan said.

The deal would be "the largest and most important contract" with the United States – barring military deals – since before Iran's 1979 Islamic Revolution, he told Fars news agency.

Many of Iran's ageing civil aviation fleet – 230 planes out of 250 according to Abedzadeh – are in desperate need of replacement.

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Parts and servicing remained nearly impossible to get while the world sanctioned Iran over its nuclear programme.

But a nuclear deal struck this year with six world powers, including the US, has lifted some of the economic sanctions on Iran in return for limits on the Islamic Republic's contested atomic programme.

Following the nuclear agreement, IranAir signed deals to buy 118 planes from the European consortium Airbus and 20 more from French-Italian aircraft manufacturer ATR.

Emerging from sanctions as a lucrative market, the Airbus deal alone was worth 22.8 billion euros [$25 billion].

But Boeing has fallen behind the race to restock Iran because as an American company it has to obtain the greenlight from the US Office of Foreign Assets Control before completing any contracts with Iran.

It has requested final authorisation for the sale, according to Abedzadeh.

He said the contract's reported value of $17 billion [15 billion euros] was not final and that more details will be provided after further negotiations.

However, US sanctions not tied to the nuclear programme remain in place, and American lawmakers have warned Boeing not to do business there as the Iran deal remains a hot topic in the ongoing presidential election.

Boeing may need to run the sale through an overseas subsidiary and use a currency other than US dollars in order to avoid running afoul of American laws.

Agencies contributed to this report