Japan Planemaker Holds Off Iran Plans Amid Trump Uncertainty

EghtesadOnline: Japan’s Mitsubishi Aircraft Corporation has put on hold its plan to sell aircraft to the Tehran-based Iran Aseman Airlines amid concern over American policy regarding the Islamic Republic under US President Donald Trump.

News ID: ۷۷۴۱۰۰

21 February 2017

“Recently, the Japanese company, in a statement, called for suspension of negotiations until the policy of the US government becomes clear,” Aseman’s deputy for planning and fleet expansion, Mohammad Gorji, told Financial Tribune in an interview.

He said the decision was made on January 16, as Trump was preparing for his January 20 inauguration.

“The Japanese are cautious in this regard, given their close ties with the United States,” Financial Tribune quoted him as saying.

Deputy Minister of Roads and Urban Development Asghar Fakhrieh-Kashan hinted in July that Iran was considering a deal worth $500 million to purchase 25 of the Japanese Company’s sole passenger aircraft Mitsubishi Regional Jet. He said most of the planes were meant to be sold to Aseman Airlines.

“We had decided to consider this type of plane as a replacement for [Aseman’s] Fokker 100s. Although the delivery dates were delayed, the talks were pursued seriously,” Gorji said.

The under-development twin-engine MRJ is designed by MAC and manufactured in partnership by majority-owner Mitsubishi Heavy Industries and Toyota Motor Corporation. It has design assistance from Toyota-affiliate Fuji Heavy Industries.

Prior to MRJ, Japanese companies had only taken one failed shot at aircraft manufacturing in the 1960s. The NAMC YS-11 was produced at a loss.

MRJ’s first flight was in November 2015, but deliveries were postponed five times to start 2020.

A publication of the Tokyo-based Nikkei reported for the first time in July that the Japanese company had started negotiations to supply 80 jets to the flag carrier Iran Air.

Gorji, however, said Iran Air had completed its purchases and that it was not considering purchasing any MRJ planes in the first place, meaning Aseman was the only Iranian Airline willing to buy the aircraft.

Mitsubishi’s second thoughts come as Iran Air’s recently-sealed deals with European plane giant Airbus and its American rival Boeing are making headway, despite concerns about Trump's tirades.

Both Airbus and Boeing have received licenses from the US Treasury Department’s Office of Foreign Assets Control to acquire 200 passenger aircraft whose aggregate prices amount to tens of billions of dollars.

Airbus delivered an A321 aircraft, the first of its 100-plane order in late December.

Iran Air expects two A300 deliveries before March 20, along with several ATR planes. The ATR contract for the supply of 20 turboprop aircraft is in the final stage, according to Iran's Minister of Roads and Urban Development Abbas Akhoundi.

ATR and the Iranian carrier have failed to reach a final contract as yet, amid uncertainty over licenses for engines made by a Canadian subsidiary of Pratt & Whitney. It is America's top military engine maker that supplies to the F-35 fighter project.

Political risks of dealing with Iran has forced Pratt & Whitney to take a cautious stance, at a time when Trump is attacking the F-35 project, as part of his general criticism to aerospace firms for going over budget, according to Reuters.

Ongoing Talks to Buy Two A340, Lease Seven A321

Gorji said Aseman is planning to add two A340s to its fleet that already contains one such plane.

“To operate the plane we already own, we need to add two other planes of this type to the fleet,” he told Financial Tribune without explaining the reason for the stated need, though he was probably referring to the financial viability of maintenance costs.

Aseman managed to purchase a long-range Airbus A340-300 indirectly from a US lessor in 2012, when the sanctions imposed over Iran’s nuclear program were still in place.

The airline aims to add even more Airbus jets to its fleet.

Gorji referred to Aseman's plans to lease seven Airbus’s A321 model, saying the move is part of state-owned Civil Servants Pension Organization's plans to renovate the carrier’s fleet through an optional lease of new planes. The organization owns the majority stake of Aseman Airlines.

“To this end, the Civil Servants Pension Organization entered into talks with a Chinese leasing company, resulting in a deal over three Airbus A321ceo and four A321neo planes,” he said.

“No financial transaction has been made yet. Any payment would require an OFAC license.”

He said Aseman expects the first delivery by May 2017, if due OFAC permits are issued.

A letter of intent has been signed between the leasing company and one of the subsidiaries of Civil Servants Pension Organization for a 12-year contract.

“All the pre- and after-sales services, including free training for pilots and technicians, access to technical and operational documents, and spare parts will be provided by Airbus,” he said.

Irish leasing company Avolon is also among the companies Aseman is in talks with.

“Negotiations are in initial stages. Orders could include both Boeing and Airbus planes, depending on the companies’ ability to deliver on time."

Gorji denied reports that it was negotiating a deal with German airline TUI to lease three Boeing 738, as well as plans to purchase 100 Fokker engines from Rolls Royce.

He said his company recently placed a contract with Rolls Royce to buy “a few” engines to be used in its eight operating Fokker 100 planes, adding that the carrier installed an engine in 2017.

“Aseman is planning to replace its Fokker 100 aircraft with other planes in the coming years,” he said.

Aseman has the third largest fleet in Iran, after Iran Air and Mahan.

The airlines’ fleet consists of three A320-200s, one A340-300, four ATR72-200s, two ATR72-500s, three B727-200s, one B727-200(F), two B737-400s and 19 Fokker 100s.

“Planes with a minimum of 100 and a maximum of 180 seats are Aseman’s best choice to maintain and develop flight capability in the next 10 years,” Gorji said.

The airline has also been in talks with Canada’s Bombardier, Russia’s Sukhoi and Brazil’s Embraer to procure their regional planes.