ATR Says It Won’t Risk Delivering Planes to Iran

EghtesadOnline: Regional aircraft manufacturer ATR has to give up delivering the remainder of the aircraft ordered by Iran because of the reinstatement of US sanctions, French daily Le Figaro quoted the company’s chief executive officer, Christian Scherer, as saying.

News ID: ۷۸۳۱۰۸

30 June 2018

“In 2018, our delivery target could be impacted given the Iranian context,” he said in an interview published earlier this week in French weekly financial newspaper La Tribune.

“Of the 80 planes we expected to deliver in 2018, there were 12 for Iran; that’s a lot.”

After international sanctions against Iran over the country’s nuclear program were lifted in early 2016–as part of a landmark deal (officially known as Joint Comprehensive Plan of Action) signed between Tehran and world powers a year earlier–Iranian flag carrier Iran Air signed a contract with ATR for 20 of its twin-engine turboprop, short-haul regional airliner with the option to add 20 more as part of the order, Financial Tribune reported.

The Iranian airline has been delivered with eight of the aircraft on order so far.

“The Iranians want to take delivery of their planes, but ATR will not take any risk of putting itself at odds with US authorities and exposing our shareholders Leonardo and Airbus to US sanctions,” he added.

Of the 12 planes ATR expected to deliver to Iran, two have already been completed, six are being assembled and four have been customized for Iran, particularly with pressurization devices, to fly over mountainous areas, according to Scherer, who says it is going to be difficult to change the fate of these jets, especially the customized ones.Iran Air has also signed contract with Airbus and Boeing since the removal of sanctions (100 from the former and 80 from the latter). Of the two contracts, only three airbus jets have been delivered to date.

“Not Entirely Confident”

To continue to deliver to Iran, ATR is trying to get exemption from the Americans, but Scherer said he was “not entirely confident” about it.

“The Americans have promised a three-month period (from May to August) to allow companies to deliver the materials that were in production at the time of Donald Trump’s announcement [on May 8] on [reimposition of] sanctions against Iran. This is only a statement of intent at this stage,” the CEO said, noting that “for the aviation industry, the three-month period is ridiculously short.” Following Trump’s announcement over Washington’s exit from the nuclear deal, Treasury’s Office for Foreign Assets Control said that it would revoke the issued license for selling airplanes to Iran. OFAC licenses guarantee the sale of new airplanes (whether made in the US or elsewhere provided that the share of American parts in the aircraft is more than 10%) to Iran Air by 2020.

Relying on French Gov’t

Scherer said ATR intends to rely on the help offered by France.

“We want to use the help of the French government to negotiate the best possible licenses during this period of three months to be able to deliver the devices manufactured or being manufactured to cushion this shock, which will be very bad for us anyway,” he said.

The French government has been at the forefront of efforts to salvage JCPOA as the country has secured an array of deals with Iran post sanctions.

Soon after the nuclear deal, Iran’s President Hassan Rouhani traveled to Paris. Afterwards, two French foreign ministers, Laurent Fabius and Jean-Marc Ayrault, as well as ministers of economy, transport, foreign trade, agriculture and higher education, visited Tehran.

The biggest contract was signed by the oil giant Total: a more than 50% stake in an investment of about $4.8 billion for the development of an offshore gas field in the Persian Gulf. However, on May 16, Total put out a statement saying that it could not continue its operations in Iran, in light of the US president’s decision.

Moreover, Europe’s second-biggest carmaker, PSA said in early June that it would pull out of two joint ventures to sell its cars in Iran to avoid the risk of US sanctions.

However, Renault announced on June 15 that the carmaker will maintain its presence in Iran while taking measures to avoid the risk of penalties for breaching renewed US sanctions.

Hope for New License

The ATR chief hopes to continue his business in Iran with “a new license to support our customer, and we want to play our role as an after-sales service provider”.

“Here too, the Americans have made a declaration of intent explaining that they will not endanger the public,” he said.

According to Scherer, “the Iranians were in discussion with us to continue to develop their fleet, we were not going to stop at the first 20 aircraft” ordered in total by Iran.

“It was just the beginning of a story,” he lamented.

Russian Rush to Fill Void

The barriers caused by the US administration have turned to an opportunity for the Russian planemaker Sukhoi to make inroads into the Iran’s plane market, battered by years of sanctions.

Sukhoi has become the sole planemaker in the world who can sell jets to Iran without needing OFAC license.

The Russian planemaker has managed to lower the share of American-made parts to 10%, which means that it is possible for Iranians to lease or purchase the plane without the need for any US administration licenses.  Two Iranian airlines, Iran Aseman and Iran Airtour Airline, have recently signed preliminary agreement for purchasing 20 SSJ100 jets each.