Iran Air Posts 1st Profit in Years

EghtesadOnline: For the first time in years, Iran's national flag carrier has posted an operating profit.

News ID: ۷۴۸۶۶۹

09 October 2019

According to Shahram Adamnejad, deputy minister of roads and urban development, Iran Air posted an operating profit of 410 billion rials ($3.59 million) in the last Iranian year (March 2018-19).

The official attributed the profit to the company’s improved performance in several fields, including ticket sales, ground handling services, technical and engineering services, catering and a more efficient use of human and other resources, cost cutting and launch of new flights, according to Financial Tribune.

Noting that the operating loss of Iran Air stood at 2,260 billion rials ($19.82 million) in the fiscal 2017-18, Adamnejad said, “The net profit of the company is still negative,” Fars News Agency reported.

Operating profit and net profit are part of the income statement of a company. Operating profit is the remaining income of the company after paying off operating expensse and net profit is the remaining income of company after paying all costs incurred by the company, which include all expenses, taxes and interests.

Iran Air is the country's biggest airline with 37 active planes (sharing the standing with Mahan Air with exactly the same number of aircraft) with an average age of 17 year. Formerly known as Homa, it was founded in May 1944 and operated its first passenger flight right after World War II from Tehran to the holy city of Mashhad.

The first airline to order and operate Boeing 747SP in the world, having the mission of obviating the domestic aviation transportation needs, observing safety regulations and forming transportation services with neighboring and countries in distance, Iran Air officially commenced its activities in April 1962.

By late 1970s, Iran Air was the fastest growing airline in the world and one of the most profitable. By 1976, Iran Air was ranked second only to Qantas, as the world’s safest airline, having been accident free for at least 10 consecutive years. Although both airlines were accident free, Iran Air came second only because of fewer operational hours flown compared to Qantas.

After the Islamic Revolution, as a result of US economic sanctions against the country, Iran Air was unable to expand or replace its fleet.

The prolonged period of time that Iran Air was under international sanctions and barred from purchasing spare parts and new planes led to a dramatic rise in its average fleet age and plunging safety record.

The imposition of international sanctions over Iran's nuclear program exacerbated the situation for the flag carrier.

However, JCPOA paved the way for Iran Air to renew its aging fleet.

Later, as the US reimposed unilateral sanctions against the Islamic Republic, the delivery process of the orders placed by Iran Air came to a halt after the US Treasury Department revoked the licenses of Boeing and France’s Airbus to sell commercial planes to Iran Air.

Although Airbus is based in France, it must have the approval of the US Treasury’s Office of Foreign Assets Control to sell planes to Iran because at least 10% of the components of the aircraft are US-made. This is also the case with any other planemaker, including ATR.

US Lifts Sanctions for Iran Air ATR Spares

The US Office of Foreign Assets Control has given turboprop manufacturer ATR permission to supply Iran Air with spare parts.

The Iranian flag carrier, Iran Air, has 13 of the Franco-Italian ATR 72-600s in its fleet. They formed the bulk of the few new western aircraft to be delivered to Iran in the two-year window when US-led sanctions against Tehran were lifted by the previous US administration. They were reimposed in August 2018 by US President Donald Trump.

The US says it will take stringent measures against western companies supplying Iran with goods and services without OFAC permission.

The ATR development occurred earlier this year, but has not been previously announced.

“In April 2019, ATR was granted a license for the support of Iran Air fleet [13 aircraft] from the OFAC,” an ATR spokesman told ATW on Aug. 13. “This license authorizes ATR, in compliance with its terms, to export parts, components and tools, update software and provide technology necessary to ensure the safe operation of the aircraft. The license expires on 30 April 2021.”

Iran Air ordered 20 ATR 72-600s, plus 20 options, in February 2016. A batch of five was delivered in the 24 hours before the sanctions were reimposed last year and it is understood that a further three were ready for delivery if the deadline had been delayed by 24 hours.

ATR initially hoped it would receive permission from OFAC to supply the remaining seven aircraft, but later accepted this would not happen.

The ATR orders were besides those for 100 Airbus and 80 Boeing aircraft, all placed after Iran signed the Joint Comprehensive Plan of Action—to limit the scope of its nuclear program in exchange for the removal of international economic sanctions—with world powers.

The aggregate value of the deals was estimated at $20-30 billion.

In addition to the 13 ATR 72-600 turboprops delivered to Iran Air, the flag carrier also received an Airbus A321, two Airbus A330s.

Boeing did not deliver any aircraft as part of the order.

Repair at Home

Technicians of Iran's flag carrier airline, Iran Air, managed to repair an old Airbus A300-600 in July in one day.

“We noticed that some parameters of the Airbus 600-300 engine were not fit for flights and decided to repair the aircraft's engine," the company’s senior repair technician, Rahim Baghban, told IRNA.

"It usually takes at least three days to repair the engine, but since all Iran Air aircrafts are now assigned to carry the pilgrims, early and urgent repair became necessary.”

The official added that an overhauled engine was installed on the plane overnight, allowing it to resume services in less than a day.

“The engine has been repaired by our engineers, despite all the sanctions and lack of spare parts. We are trying to return this aircraft to the service within 18 hours," he said.

The repaired 23-year-old Airbus A300-600 is one of four planes of this type owned by Iran Air. It has made seven flights to Saudi Arabia since hajj flights began earlier this month.

Last week, Kish Airline also brought its grounded Airbus A321 back to service after a year and a half.

The airline resumed flying its comeback aircraft on Tehran-Kish route on August 9.

The repair process of the commercial passenger twin-engine jet airliner, which accommodates 120 passengers, took less than three months, IRNA reported.

Kish Airline, established in 1989, operates from Iran’s southern tourist hub and free trade zone of Kish Island. As well as domestic flights, it also operates international and charter services.