Sunday, January 17, 2016

With Iran Sanctions Gone, Airbus Expects Huge Order

Now that the International Atomic Energy Agency (IAEA) has confirmed that Iran has completed the “preparatory steps” that lead to the lifting of economic sanctions against the country, there are likely to be some major economic impacts on other countries and businesses. One business that could be a big loser is the oil industry, while a big winner now appears to be Airbus Group SE and, potentially, The Boeing Company. 

The Middle East oil industry is taking a few hits Sunday morning on an Iranian announcement that it plans to raise production by about 1.5 million barrels a day to 4.2 million barrels by the end of this year according to a report at CNN. This is not exactly new news, and we would have expected that the increase was already priced in.

Iran has been barred from buying new aircraft from Western makers since the 1970s, and demand for new planes could be as high as 500 planes at a rate of 50 planes a year for a decade.

The expected deal with Airbus has been in the making for some time, and Iran’s transportation minister said on Saturday that the country’s flag carrier, Iran Air, will buy 114 Airbus passenger jets as it sets out to upgrade a fleet of 45 planes with an average age of 26.8 years. According to a report from Bloomberg, the airline will acquire new and used A320s and out-of-production A340s with first deliveries as early as July.

Iran Air currently flies 13 Airbus A300s, 2 A310s, and 6 A320-200s. None is less than 20 years old, way past retirement age for a modern passenger fleet, according to Planespotters.

The airline also includes 6 Boeing 747s in its fleet and the average age of the 4 747-200s is 35 years and the average age of the 2 747SPs is 37.7 years. An Iranian official noted that the airline is considering adding Boeing 737s and 777s to its fleet.


President Obama on Friday empowered the secretary of state to allow the export of civilian passenger aircraft to Iran.

In 2010, Congress granted Obama the authority to allow exports of goods, services, or technologies to Iran if he determines those sales "to be in the national interest," USA Today reported. 

On Friday, Obama delegated that authority to Secretary of State John Kerry through a presidential memorandum, a presidential directive similar to an executive order.

Obama’s decree came ahead of the implementation day of last year nuclear deal between Iran and world powers.

“The [nuclear] agreement makes two exceptions: Iran can buy US civilian passenger aircraft, and sell certain crafts – specifically carpets and rugs – to the United States”, USA Today said.

US sanctions ban the sale of aircraft and parts to Iran. Under an interim nuclear deal in 2013, the West eased the ban on sales of spare parts but selling planes is still prohibited.

Western sanctions are the biggest enemy of Iran’s aviation which has been plagued by a series of air crashes, claiming the lives of hundreds of Iranians.

The nuclear accord reached with Tehran last July has provided Iran with a chance to renew its fleet of commercial aircraft.

Minister of Roads and Urban Development Abbas Akhoundi has said that Iran would need to buy 500 commercial aircraft of various models at a cost of $50 billion.

Iran’s civil aviation fleet consists of 248 aircraft with an average age of 20 years, 100 of which are grounded, he has said.

Original article can be found here:

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