Saying the deal would “support tens of thousands of U.S. jobs directly associated with production and delivery,” Boeing and Iran Air yesterday announced an agreement for the state-run company to purchase 80 aircraft for $16.6 billion at list prices. The first aircraft will be delivered in 2018 if all goes well, but it will need to fly through a lot of political flak to get there. News of the pending agreement was first announced in June.
“Boeing’s Iran Air sales, because they involve a state-owned airline, require approval from the U.S. Treasury, State Department and Congress mainly linked to any potential financing arrangements, said people familiar with the sales process. This presents new potential obstacles to any transaction should [President-elect Donald] Trump, an outspoken critic of the Iran deal, oppose these kinds of commercial openings with Iran,” report Robert Wall and Asa Fitch for the Wall Street Journal.
“We will aggressively fight this deal in the next Congress, though we probably won't even need new legislation to do it,” David Pasch, communications director for Rep. Peter Roskam (R-Ill.) said yesterday. “The incoming appointees at Treasury and State will no longer report to a White House willing to bend over backward and ignore national security concerns [in order] to keep Iran from walking away from the nuclear deal,” reportUSA Today’s Mike Snider and Oren Dorell.
“In May, Roskam, along with fellow Illinois Republican Reps. Robert Dold and Randy Hultgren, sent a letter to Boeing asking the company not to do business with Iran until it renounces support for terror groups,” Snider and Dorell write.
“The Republican-led House of Representatives last month voted to bar commercial aircraft sales to Iran in a move that could block the Boeing deal,” the AP reports in the Chicago Tribune. “That legislation must still pass the Senate, where it will likely face opposition from Democrats. U.S. President Barack Obama has said he will veto the bill if it reaches his desk before he leaves office on Jan. 20.”
Iranian Transport Minister Abbas Akhoundi said “the deal has a clear message for the world: We support peace and security as well as the growth of Iran based on a win-win policy,” according to the AP. “We hope that despite changes in the U.S. administration, the country will remain loyal to its commitments.”
The order is for 50 737 MAX 8s, which are said to be 14% more fuel efficient than today's most efficient Next-Generation 737s, 15 777-300ERs and 15 777-9s. The release announcing the deal goes out of its way to point out that the airline, which has headquarters in Chicago, has “more than 13,600 U.S. supplier and vendor partners across all 50 states” and that its “supply chain currently supports more than 1.5 million U.S. jobs.”
“The intended recipient of Boeing’s message clearly seemed to be President-elect Donald J. Trump,” writes the New York Times’ Christopher Drew. “Its carefully worded statement is emblematic of the tightrope that America’s biggest exporters are walking amid his threats to shake up trade policy and undo the Obama administration’s nuclear accord with Iran. That agreement lifted the American sanctions on Iran, making Boeing’s jet deal possible.”
The two entities clashed last week, you’ll recall, when Trump tweeted that Boeing’s costs for a new generation of Air Force One aircraft were out of line, calling for canceling a contract to build them that Boeing, in fact, does not have (at least yet).
“The pact reopens a market where Boeing hasn’t delivered a plane since 1977 — two years before a revolution roiled Iran and set off four decades of tension with the U.S.,” reportBloomberg’s Golnar Motevalli and Spencer Soper.
It is a critical market for Boeing in its competition with Airbus Group SE, Loren Thompson, a defense analyst with the Lexington Institute, a nonprofit that has received funding from companies including Boeing, tells Motevalli and Soper. “Boeing can’t compete with Airbus if it can’t sell to places like Iran and China,” he says. “Selling to Iran is a business imperative for Boeing.”
As for Iran, most of its 250 commercial planes were “purchased before 1979 and, as of June, only 162 were operational, with the rest grounded because of a lack of spare parts. Iran Air, whose Web site lists a fleet of 43 planes, offers direct flights to over 30 international destinations, including London,” reportNBC News’ Gemma DiCasimirro and Ali Arouzi.