Iran Aseman Airlines Targets Regional Market Following Boeing Deal

EghtesadOnline: Having secured a deal to purchase up to 60 single-aisle Boeing 737Max jets, Iran Aseman Airlines, the country’s third largest carrier, is planning to become a key regional player.

News ID: ۷۷۶۹۴۲

12 June 2017

Aseman Spokesman Seyyed Amirreza Mostafavi said, “We will focus on domestic destinations and those in the region with this purchase.”

Mostafavi made the remark to Financial Tribune following the signing of a firm contract between Aseman CEO Hossein Alaei and Boeing’s Regional Director for Contracts James Larson in Tehran on Saturday in the presence of Iran’s aviation authorities and representatives of the American planemaker.

“Our plan is to become the top domestic airline in terms of passengers and flight routes. We also seek to improve our position in the region,” Financial Tribune quoted Alaei as saying.

The deal stipulates the purchase of 30 of Boeing’s newest model, with the option of adding 30 more in the future. Each B737Max is worth around $100 million based on list prices but airlines often end up getting remarkable discounts when the size of the order is big.

“This has the hallmarks of a very good deal that would allow Aseman to not only tap into and exploit the huge domestic route network demand across Iran, but it would also allow the carrier to venture into the Persian Gulf with the newest, most fuel efficient single-aisle airplane and become a solid low cost operator,” Saj Ahmad, chief analyst at the Dubai-based Strategic Aero Research, told Financial Tribune.

According to Aseman, their custom ordered type of B737Max seats 168 passengers and is able to fly more than 6,000 kilometers.

It has been the fastest-selling aircraft in the history of Boeing since its production started in August 2011.

According to Boeing, the double-engine aircraft has been ordered by 87 carriers that bought 3,700 jets of this type.

Boeing says the 737MAX’s efficiency delivers 8% lower operating costs than its main competitor Airbus A320neo.

The new 737MAX Advanced Technology winglet increases fuel efficiency by 1.8%, it added.

Ahmad noted that the CFM International LEAP-1B engine that powers the 737-Max is far more robust, fuel efficient and has better and longer on-wing time compared to the GTF engine on the A320neo.

> Trump's Iran Policy Uncertainty

Now the biggest hurdle to surmount is getting clearance from the US Treasury Department’s Office of Foreign Assets Control, as the US President Donald Trump policy on Iran remains uncertain.

"Boeing has applied to US Treasury Department’s Office of Foreign Assets Control for approval of a license to perform under this transaction," reads a Boeing statement Aseman shared with Financial Tribune.

Mostafavi said his company expects an OFAC license within a month.

Early April, when a preliminary deal between the two companies was publicized, he said the US had given a green light to the issuance of the licenses.

“Without that [OFAC licenses], this deal simply cannot be realized. Since the Trump Administration hasn’t really signaled where it sits with selling airplanes to Iran, while begrudgingly admitting that the country is sticking to the nuclear deal, there’s no way of knowing whether it’ll get authorization or not,” Ahmad said.

“But if Trump wants to ensure more jobs are created in the US as per his election promise, he’d have to be rather silly to snub such a lucrative deal like this—if only because Boeing would not want to have Airbus come in and replace them—and that would directly mean lost jobs.”

Boeing has said the deal will help sustain 18,000 American jobs.

According to Aseman, the jets will be delivered between 2022 and 2024. But Boeing has agreed that Aseman will have the option of receiving airplanes whose orders might be cancelled as of 2019.

According to Mostafavi, Boeing has agreed to support financing 95% of the deal.

The remaining 5% will be financed by Iran’s Civil Servants Pension Organization, a major stakeholder of Aseman.