US Visa Row Overshadows Iran’s Western Plane Deals

EghtesadOnline: The deals for 80 Boeing jets and 100 from Europe’s Airbus struck last year are seen by western investors as a crucial test, as they seek business in Iran in the wake of the nuclear deal that led to the lifting of most sanctions.

News ID: ۷۳۹۵۶۶

01 February 2017

People involved in the airline deals say it is too early to assess the impact of the US visa ban but worry that hardening rhetoric in Tehran and Washington can only add to a list of complications that could slow, if not endanger, the jet sales, Reuters wrote in an article. Excerpts follow:

While Airbus planes come from Europe, the administration of US President Donald Trump can veto the sale of all the planes to Iran because of the use of US parts in the aircraft, which need US export licenses.

The visa ban could also prolong a hiatus in talks about financing deliveries of jets, with European and Chinese banks reluctant to put up money to back Iranian jet purchases for fear of a backlash against their US operations, according to Financial Tribune.

“It will make people more nervous, more risk-averse, more inclined to wait and see,” said a senior western financier, who asked not to be named.

Iranian officials say that even before Trump imposed restrictions on travel to the United States from seven mainly Muslim countries, concerns about what the new US president might do had already put the brakes on post-sanctions business.

During his election campaign, Trump criticized the nuclear accord six major powers struck with Iran and his victory in November increased uncertainty around Iran’s investment drive.

Final Ruling

“The process has been very slow ... Foreign investors were very interested to work in Iran, but since Trump’s election the process has almost stopped. Investors are worried about possible US punishments if they work with Iran,” a senior official of Iran’s Economy Ministry told Reuters.

Final decisions on whether the plane deals go ahead may well lie with Trump and Iran’s Leader Ayatollah Seyyed Ali Khamenei.

Since taking office this month, Trump has largely ignored the Iranian jet deals in public, even as he lambasted US aerospace firms, including Boeing, about other projects.

For now, at least, Boeing appears comfortable that Trump won’t automatically block its deal, though questions also remain over further approvals from Iran, two industry sources said.

Boeing and Europe’s Airbus declined comment.

Still, any long-term US travel curbs could also undermine the case for long-distance jets capable of linking Tehran with expatriate communities in cities such as Los Angeles. Boeing plans to start delivering its large 777 jets in 2018.

Iran Air has already cancelled orders for Airbus A380 superjumbos, initially meant to signal its ambitions to compete on equal terms with the hubs of Persian Gulf rivals.

Besides the Boeing and Airbus orders, state airline Iran Air is planning to buy 20 small Franco-Italian ATR turboprops to help expand economic development to smaller Iranian cities.

But officials say a final deal has been held up due to uncertainty over some licenses for engines made by a Canadian subsidiary of Pratt & Whitney, America’s top military engine maker and supplier to the colossal F-35 fighter project.

Pratt & Whitney is seen to be wary of the political risks of dealing with Iran, especially with the F-35 project at the center of Trump’s criticism of aerospace firms for going over budget.

A Pratt & Whitney Canada spokesman said it was “working closely with ATR to ensure all necessary licenses are in place prior to providing any products or services”.

One senior Iranian official said he doubted the aircraft deals would be ditched altogether.

“I don’t think the deal will be cancelled because Rouhani signed it with the approval of the Leader ... But he might be forced to cancel some of the orders to save the deals,” said one senior official.

So far, Iran Air has just received one of the aircraft it ordered after the nuclear deal: an Airbus A321, paid for in cash. It was promptly deployed widely on domestic routes in an apparent effort to showcase the benefits of the lifting of sanctions.

In its first 12 days, Iran’s first brand-new jet in decades covered 46,000 km between 15 cities, from the Kurdish city of Kermanshah in western Iran to the holy city of Mashhad in the northeast, according to FlightRadar24 data.