Sunday, January 24, 2016

Iran Eyes Boeing Planes to Modernize Aging Fleet: Transport minister’s comments follow signals of a deal with Airbus

A Boeing 747-200 E4 jet of the U.S. Air Force rolls past the tower after its arrival at Zurich Airport, Switzerland, on January  21, 2016.

The Wall Street Journal
By Robert Wall
Updated Jan. 24, 2016 4:34 a.m. ET

TEHRAN—Boeing Co. could benefit from a potential bonanza of plane orders from Iran, the country’s transport minister said Sunday, after it signaled a deal with rival Airbus Group SE that could include A380 superjumbos was in the works.

“We are open to buying from Boeing,” Abbas Akhoundi said in a brief interview little more than a week after the U.S. and Western countries agreed to lift an embargo on aircraft sales to Iran as part of a wider accord to significantly constrain the country’s nuclear activities.

Years of sanctions, some imposed in the wake of its revolution in 1979 rather than over the country’s nuclear program, have left Iran with one of the world’s oldest aircraft fleets. It has signaled interest in quickly modernizing its aircraft fleet.

“We need short-, middle-range and longer-range airplanes,” Mr. Akhoundi said at the first Iran Aviation Summit organized by the CAPA Centre for Aviation consultancy. Aviation would be key to reviving the country’s tourism industry, he said.

Boeing has said “there are many steps that need to be taken should we decide to sell airplanes to Iran’s airlines. For now, we are assessing the situation.”

Even before sanctions were lifted, Mr. Akhoundi said the country had an agreement to buy Airbus jetliners. Airbus hasn’t confirmed that order, but said it could enter into business with Iranian airlines in compliance with international laws.

The Airbus deal would be for 127 planes and address fleet plans through 2022, Iran’s deputy transport minister for finance and international affairs, Asghar F. Kashan, said in an interview. It would include eight A380 superjumbos, with deliveries of the double-deckers starting around 2019.

Such an order would be a big boost for Airbus, which has struggled to find buyers for its flagship plane. Many airlines have shied away from the jet, which has a list price of $432.6 million.

Mr. Kashan said the Airbus deal would be mostly for new A320 single-aisle planes, but would also include A330 and used A340 long-haul planes. Iran also plans to buy 16 A350 jets, Airbus’s newest long-range jet. Airbus and the plane maker’s government-owned export credit agencies will help finance the transaction, he said.

Airbus Chief Executive Tom Enders last week said Iran was “a huge market” whose carriers could place 400 to 500 plane orders in the coming years.

Deals for all of the new planes could be formally announced when Iranian President Hassan Rouhani visits Paris this week, Mr. Akhoundi said.

Mr. Kashan said Iran also may buy 40 turboprop short-haul planes from the ATR joint venture between Airbus and Italy’s Finmeccanica SpA. Deliveries would unfold this year and next, he said.

He said it was unclear how soon a deal with Boeing could be finalized. The plane maker still was trying to sort out how to deal with Iran and comply with U.S. Department of the Treasury’s Office of Foreign Assets Control rules, he said.

Iran Air, the country’s flagship airline, has a fleet with an average age of more than 25 years, according to research service AeroTransport Data Bank, though some of those aircraft aren’t actively flown. The European Union has placed restrictions on which aircraft the carrier can operate in Europe because of safety concerns.

Mahdi Hashemi, chairman of the Iranian parliament’s civil-aviation commission, said there was urgency to rapidly expand the fleet of around 150 aircraft to 500 within three to five years, adding that new planes also would boost safety.

Western airlines are also expected to benefit in the short term following the lifting of sanctions. Several Western carriers are making plans to boost service to and from Iran to take advantage of growing business ties.

Dutch airline KLM is considering restarting services to Tehran, though the carrier is still assessing whether all sanctions have been removed, Chief Executive Pieter Elbers said. Sister carrier Air France last year announced plans to resume services to and from Tehran. British Airways is actively considering starting flights to the Iranian capital, Willie Walsh, chief executive of the airline’s parent, International Consolidated Airlines Group SA, said last week.

Mr. Akhoundi said Iran also plans to spend $250 million to upgrade its air-traffic management systems.

Iran’s airspace has become busier even ahead of sanctions relief. Fighting in neighboring countries has driven airlines to fly routes over Iran. Mr. Akhoundi said the country had opened new corridors for flights and would work to assure a high degree of safety of its airspace. 

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