US clears aircraft sale to Iran

22 September 2016

Islamic Republic needs up to 90 planes annually

The US Treasury Department granted licenses on 21 September to Boeing and France’s Airbus to deliver aircraft to Iran, according to a report by the New York Times.

The report said the license covered the sale of 80 Boeing planes to Iran Air, and Airbus’ license covered an initial sale of 17 planes.

The Boeing transaction was first confirmed in June, with Iran’s Civil Aviation Organisation (CAO) indicating that the memorandum of understanding (MoU) entails the sale of 100 aircraft. The deal was estimated to cost up to $25bn based on list prices for the aircraft.

In July, the US Congress approved measures that effectively disallow the sale and delivery of aircraft from both Boeing and Airbus, whose planes carry up to 40 per cent parts manufactured in the US, to the Islamic Republic citing the use of civilian Iranian aircraft in transporting weapons.

Sources in Iran, however, have insisted over the past two months that the transactions were pushing through.

The most recent decision by the Treasury Department has over ridden the legislation passed by the US Congress. Some view the decision as part of political manoeuvring by the Obama administration to help Iranian President Hassan Rouhani, who is seeking re-election, and who staked much of his reputation on promised economic dividends from the termination of nuclear sanctions, the New York Times report said.

The Iranian government has said acquiring new planes is a priority following the lifting of nuclear-related international sanctions in January. It said it would require up to 90 new planes annually over the next five years to revive its antiquated fleet.

Airbus signed a deal to sell 118 passenger aircraft to the Islamic Republic in January, a transaction that is estimated to fetch $27bn based on list price. The sale was understood to be partly funded by Italy’s Sace. The Islamic Republic’s frozen assets within the EU banking systems have been used as collateral for the loan.

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