Embraer Expects Iran to Buy Short-Haul Jets

EghtesadOnline: Representatives of Brazilian planemaker Embraer S.A. have paid a visit to Iran to market their regional aircraft in the untapped, yet competitive Iranian market for short-haul jets.

News ID: ۷۳۶۴۷۱

01 September 2016

Arjan Meijer, Embraer vice-president; Stephan Hannemann, market manager for Middle East and Africa; and Nico Martiniello, airline manager at Embraer Commercial Aviation were part of the mission,  the Brazilian company said.

Embraer organized events from August 29 to 31, including an educational session and a conference. Executives from the company as well as other international companies including Lufthansa delivered speeches during the events alongside Iran’s Minister of Roads and Urban Development Abbas Akhoundi, and President of Iran Civil Aviation Organization Ali Abedzadeh.

The Brazilian planemaker also operated two demonstration flights around Tehran on Wednesday using an Embraer E190 model, a double-engine 100-seat capacity regional jet.

“This will be a unique opportunity to get a perspective of the vibrant Iranian aviation market from Embraer, its partner and world-leading airlines from other regions,” the company said in a statement.

“We are sure that Embraer’s product will play an important role to help airlines to develop their business plans in the 70 -130 seat category very efficiently.”

Unshackled from decades of sanctions imposed on its local aviation industry since 1979, Iran is considered a lucrative market for all sorts of passenger aircraft, including short-haul planes.

Embraer is an aerospace conglomerate that produces commercial, military, executive and agricultural aircraft and provides aeronautical services. It is headquartered in Sao José dos Campos, Sao Paulo State, Brazil. The company competes internationally with Canadian rival Bombardier for the title of third-largest airplane maker after Airbus and Boeing. Since it was founded in 1969, Embraer has delivered more than 8,000 aircraft. About every 10 seconds an aircraft manufactured by Embraer takes off somewhere in the world, transporting over 145 million passengers a year. The company maintains industrial units, offices, service and parts distribution centers, among other activities, across the Americas, Africa, Asia and Europe.

Need for 50 Regional Jets

According to CEO of flag-carrier Iran Air, Farhad Parvaresh, the Islamic Republic has the capacity to add 50 regional planes to its fleet within the next 10 years, in addition to the 20 short-haul aircraft the country has ordered from French-Italian plane manufacturer ATR.

“The ATR jets will meet the needs of 60% of Iran’s small airports,” he has been quoted as saying.

Iran signed the ATR deal, worth more than $1 billion, during President Hassan Rouhani’s visit to Italy and France late January, following the lifting of nuclear sanctions, as part of a July deal between Tehran and world powers, according to Financial Tribune.

ATR—Avions de Transport Regional or Regional Air Transport in English – is co-owned by European aircraft manufacturer Airbus and Italian aerospace group Finmeccanica.

The deal also allows Iran to add another 20 jets to the purchase in the future, according to its needs.

Iran is also in talks to purchase Japan’s first locally-made passenger aircraft Mitsubishi Regional Jet, which is being built by Mitsubishi Aircraft Corp., a unit of Japan’s Mitsubishi Heavy Industries Ltd to break the regional-jet duopoly of Embraer and Bombardier.

Deputy Transport Minister Asghar Fakhriyeh-Kashan earlier said a Japanese delegation would visit Tehran in December to follow through on the negotiations.

“The Mitsubishi Regional Jet seats less than 100 passengers. Since Iran Aseman Airlines mostly operates domestic flights, the Japanese plane is a good option for this airline,” Fakhrieh said.

Iran-Japan talks on the MRJ planes began in June during the International Air Transport Association Conference in Dublin. Later in July, aviation officials from the two sides met at the Farnborough Air Show in London.

According to Fakhriyeh, Iran is willing to purchase 25 short-haul aircraft worth up to $500 million from the Mitsubishi.

Meanwhile, Iran has signed preliminary agreements with French planemaker Airbus and its American rival Boeing to purchase more than 220 short- medium- and long-haul jetliners. However, those deals have so far failed to make it to binding contracts.

Iran has been unable to find a way to finance the multibillion dollar deals as major European banks are reluctant to engage with the country, fearing punishment from the United States, which maintains a set of its own sanctions against Iran unrelated to the nuclear program.

On the other hand, planemakers (including non-American manufacturers such as Airbus, Embraer and Mitsubishi which use parts manufactured by US-based companies) need to obtain license from US Treasury Department’s Office of Foreign Assets Control to be able to sell planes to Iran.

The Center for Asia-Pacific Aviation (CAPA) has scheduled the ‘Iran Aviation Finance Summit’ to be held in Tehran September 18-19, bringing together key decision-makers and global experts. The event has been organized with the aim of providing a forum to identify financing solutions for transactions related to Iran’s aircraft acquisition, leasing and the development of airport and airspace infrastructure.

Established in 1990, CAPA provides independent aviation market intelligence, analyses and data services that support strategic decision-making at many of the world’s most recognized organizations.